Buying a first home is the most difficult it’s ever been for single buyers in a market where home ownership rates have fallen to their lowest levels in 60 years.
A Stocktake of New Zealand’s Housing, a report commissioned by the Government late 2017 and released earlier this month, has found a number of factors have contributed to declining home ownership rates, including our growing population, fewer new homes being built and house prices rising faster than incomes.
According to QV, in the 12 months to January 2018 average house values rose by 8.9% to $764,560 in Wellington City, and 12.9% to $544,874 across Kapiti.
What was possible even 10 years ago is almost impossible today for buyers on one income. It’s our experience that if you’re on your own, it’s unlikely a bank will approve lending (of any meaningful amount) unless you have significant income—even with a sizable deposit. Just as a rough guide, with 20% deposit, borrowing power (loan size excluding deposit) is around 5 times your annual salary. With less than 20% deposit it's around 3.5 to 4 times your annual salary, assuming minimal debts and no dependents.
If you’re a single buyer and are determined to buy your first home, there are some things you can do:
- Look further afield for a first home if you’re happy to travel to work.
- Pool resources—consider buying with a family member, or investing with trusted friends.
- See if a guarantor can help boost deposit potential.
The key here is to explore all possible avenues, to see if you can achieve home ownership a different way.
Our friendly team is always available to talk through the options available to you—give us a call to start your home ownership journey today 0800 000 517.