First Home Buyers – the time is now! ….ish

At least that’s the rhetoric I’m hearing now. It’s probably because sales are getting slower in the suburbs first home buyers cannot afford. The average house price in Mt Albert, Royal Oak and Long Bay have declined the most out of all suburbs in Auckland in the last six months. And yet in suburbs like Takapuna and Onehunga, the average price is increasing. This is probably to do with a general increase in dwellings on the market in these areas. But it does show that homes are still being sold. And given the plethora of grants available to First Home Buyers it’s no wonder some suburbs are still hot despite the Auckland housing marketing hitting an 11 year low. With initiatives like the Welcome Home Loan and Home Start Grants, houses are there for the taking.

Interestingly, I came across this article which outlines similar initiatives in Australia. The Coalition’s First Home Loan Deposit Scheme is actually directly based on the Welcome Home Loan initiative. Although as Australian’s often do, they upped the ante. FHB’s would only need 5% of the loan amount, not 10% as we do here. The income caps would also be dramatically higher, A single person earning up to $125,000.00 could qualify for the scheme and a couple earning up to $200,000.00 could take advantage. In New Zealand it’s $85,000 for singles or $130,000 for couples.

Home Ownership Crisis

Following a housing crisis that affected many parts of the world there is now a major push to increase home ownership. Biggest problem here? While house prices may have flattened. The price is still extremely high compared to when many of these FHBs parents’ bought homes. So while there are lots of opportunities to get on the ladder it can still be tricky to save even 5% or 10% of the average house price in Auckland. Especially for those without access to the Bank of M&D.

Banging on, but Supply and Demand

The other thing these initiatives don’t address? There still isn’t enough supply to meet demand. Thankfully in NZ we have property price caps with many of the first home buyer initiatives. If you want to capture the FHBs market, i.e. those who can access all these government handouts, you have to keep your Auckland property under $600,000 for existing homes or $650,000 for new builds. It’s even lower in other parts of the country. So unlike Australia there is a measure to ensure that FHBs don’t overly increase demand and push prices up.

VARIETY, RANGE, DIVERSITY!

However, the scant pickings for homes in these prices brackets really does show just how much focus there has been on building the same carbon copy house for the last 10 to 20 years. The classic four bedrooms, double garage, en suite situation.

Not many FHBs want to live in a house that big. And if they did – goodbye to all the Government freebies because there is no chance that type of house falls under the property price cap. Which puts them back to square one of not being able to save up enough deposit.

Arghhghg. The circles we send ourselves in.

Kudos to the Govt for implementing some type of policy that helps some FHBs. I’ve seen it work for two of our MHG team members. Yet, it doesn’t solve the bigger problem. Ultimately we need a far greater housing stock and we need far more variety in the types of homes available. And just like this Australian publication says – flooding the market with homes (although at our building and consenting rates this flood is as likely as needing The Ark) will inevitably bring down the prices of all homes.

You can’t please everyone. Someone has to loose. Why should it be first home buyers?

Bella Jackman