First home buyers are finding it more difficult than ever to buy in the Auckland property market due to high prices. Recent years have seen housing prices soar in Auckland, which coupled with LVR restrictions for Banks has left singles, couples and families struggle to get a foot into the property market. While this is frustrating for first home buyers, it gives them the option to either enter the housing market by borrowing through non Bank lenders who do not have the same restrictions (mortgage brokers such as iLender) or to get on the property ladder in other growth locations.
Restrictions to first home buyers in Auckland
Over the past three years, Auckland house prices have increased an unprecedented 52%. What makes this figure even more remarkable is that houses in the rest of New Zealand have only increased by 11% on average – so Auckland housing prices have increased 4.7 times more than houses in the rest of New Zealand. A resident in Auckland who owned an $800,000 home in 2013 will have seen their home value rise to $1,216,000. In contrast, if that home was not in Auckland, it would have only risen to $888,000.
This is not the first time that housing prices in Auckland have risen faster than the rest of New Zealand. Historically, in situations when Auckland prices have risen faster than the rest of New Zealand, a market correction has occurred, with houses throughout New Zealand increasing in price or the value of houses within Auckland dropping.
While some market analysts believe a market correction will take place, it remains uncertain, as the trend towards globalisation has seen city centres rise in economic production relative to outer regions, which have kept housing prices higher. A natural market correction may not happen, and so first home buyers may choose to buy a home in Auckland anyway with the help of a mortgage broker such as iLender.
What can you do to get on the property ladder?
If buying a house in Auckland does seem like a current option, you may have identified that there is an opportunity to take advantage of buying property outside of Auckland.
As properties outside of Auckland have a much lower average price, they are much more affordable. And as they have only risen by 11% on average in the past three years, they may also have room for future growth.
Even first home buyers who work in Auckland are positioned to take advantage of this opportunity. By renting in Auckland you are able to purchase an investment property outside of Auckland – a property that is more affordable and lower risk. The areas that are ideal for first home buyers looking to get on the property ladder must be affordable but positioned to grow in value. These locations include Tauranga, Wellington and Hamilton.
How you can get started
If you’re new to the mortgage market interest rates, mortgage brokers and poor credit can be intimidating, but they don’t have to be when you choose nonbank lending. You also don’t have to save for years for a deposit; at iLender we make entry into the property market easier for you. Purchasing outside of Auckland is the current opportunity in the New Zealand property market, and iLender has the expertise in regional areas to match you with your ideal home and loan.
