Saving for your first home deposit but the prices keep going up?
With house prices on fire, the deposit is getting increasingly out of reach for first home buyers. This is especially true for Auckland.
With a median house price of $748,700, and a $77,500 median household income, Auckland is the fifth most unaffordable city as per the much quoted Demographia Survey of 367 international cities in US, Canada, UK, Ireland, Japan, Hong Kong (China), Singapore, Australia and New Zealand.
As per the Home Loan affordability by Interest.co.nz, a buying a first home in New Zealand is most unaffordable in Auckland. It takes 60.7% of the median take‐home pay of a young family to service a mortgage of a median priced home in Auckland as of December 2015.
The good news…
The good news is that Auckland Council has set itself a target of bringing down the median price so that price to income ratio is reduces to 5 by 2030 from the current 9.7. It is taking a number of steps to achieve it and quickening the pace, after receiving much criticism on the slow response by it.
In recent months, residential sales volume in Auckland declined in December 2015 by 18.6% compared to December 2015. Yes, declined. As per the recent ASB's housing confidence survey, expectations around rising Auckland house prices have plummeted due to new housing measures introduced in 2015.
Moreover, Auckland Council is frantically working behind the scenes to change the residential zoning to accommodate for multi-storied buildings, terrace houses and apartments. The council has recently released new zoning maps for 43 suburbs and is set to release more maps in the coming weeks and months.
There may be a number of questions on your mind related to how much deposit you need and how much mortgage can you get, such as:
Know your options…
- How much deposit you actually need?
- What sources of deposit can you use? E.g. Equity from parental property, Kiwisaver, etc.
- Which banks might be willing to lend to you given your unique circumstances?
- Any lenders other than banks who could help you pay a mortgage instead of rent?