Should 1st home buyers stay out of this market?
Over time property prices always rise. There a sometimes a few dips, but even a Global financial crisis didn’t manage to halve the property prices that some people predicted, so should the alleged current frenzy put you off buying ? Absolutely not!
Tony Alexander is an economist for BNZ. He is a brilliant speaker, entertaining, factual and manages to get a message across to the audience in a manner easily understood by us all. Whilst he admits that he doesn’t personally have a mortgage he does give some insight into what he would do if he did.
I’ve been reading his commentary on property prices. Interestingly he predicted a housing crisis several years ago occurring in Auckland. And he is right on the money.
Whenever there is a shortage of houses, prices go up as people fight their way into the market
In my opinion messing around with bank ratios won’t halt the growth. I think there is a really easy answer, and one sure way to solve the “crisis” and that is increase the supply! Is this likely to happen? I doubt it.
Council should be forced to get their act together and allow the opening up of subdivisions in a hurry. Instead of being bogged down by bureaucracy, follow Nike’s lead and Just do it! Its amazing how some countries manage to cut the red tape and get major projects happening quickly. If Politicians believe we have a housing crisis on our hands, then why can’t we do that here? I personally like the idea of minor dwellings being built on large properties, We don’t all want or need big sections, and just because we are single doesn’t mean that we necessarily want to live in an apartment. So allowing smaller properties and higher density in many cases, I think is a good thing. Like myself, many of my single friends and clients want to live in a house but don’t need a massive section and want to feel as though they are part of a small community and neighborhood.
This market has been really interesting for me to watch. I’ve been out helping friends look for both homes and rental properties. I’ve lost count of the number of auctions I have attended and been mortified watching foreigners clearly very new in NZ buying up house after house after house.However, I also know that this frenzy is limited to specific area’s in Auckland and is definitely not a blanket issue across the whole city.
I don’t know where their money comes from, but wherever it is, there’s no shortage of it. I suspect it is simply years of hard work, discipline and a good savings habit that us kiwis have been lacking, over decades now? Will we follow their lead and start working and saving harder?
What I find fascinating about watching some foreigners buying is that they don’t appear to have any strategy whatsoever, and will just outbid each other so as not to lose face. A house in their target area is often selling for way over what would be considered common sense.
The First Home Buyer
what I have observed
what opportunities I see them create and are available in this market
Kiwi saver – our younger generation have started saving and now many of them are able to buy their 1st home making use of the grants available. I also think it has created a savings culture beyond kiwi saver as I have witnessed many of them choose to leave their kiwi saver balances alone and just use their own savings as the deposit. They then get creative and continue to live with family while they rent their first home out to build more equity into the property.
Quality of our property stock – You know its bad, when your friendly real estate agent doesn’t want to take you to look at a house, and tell’s you “Sue – its a dog””. Usually, I get excited at buying properties that need a little bit of TLC. But some of the houses I have seen just deserve being bulldozed.
One of my own properties that I purchased years ago had fencing that was simply packing pellets turned on their side.. Boy did I have fun. When I knew nobody was watching I karate kicked the fences down (well if you’ve seen the size of my arms, you know I couldn’t push them down).
So, I’ve come to the conclusion that there is an awful lot of property on the market at the moment that needs work to improve them. This is always a good opportunity for the 1st home buyer to get in at a more affordable price and in time add value, building equity through hard graft. Its probably also the reason so many younger ones stay at home for longer. They don’t want to live in the houses that they can actually afford!
Some clients have taken 6 mths to find a suitable property being outbid at an auction is usually why its not just one month! but the great news is, one by one, everybody does get there in the end. It might take 10 auctions, but my advice is, definitely don’t give up.
- Know your budget,
- do your home work on the house, and
- don’t get caught up in the euphoria of the auction.
Buyers Advocate – Many clients have used the services of one of our team member’s Stu Mcloughlin – he’s a licensed auctioneer. Stu tells us that because of the fantastic energy in an auction room, people are often like the possum caught in car headlights. There is so much going on they don’t hear what’s being said or see what’s being done. He’s been a long time in the game and has a great calming influence with a steady hand at the wheel. Our clients say Stu’s support is “price less” . This is a free service we offer to all of our clients however Stu is happy to help non clients as well, but he will charge a flat fee for that service
Clients often asked, where do I buy, where do I start?
We have a saying in our office – “Fish your feet first”. So we recommend that you start with the area you know. I would focus on
- where you currently live
- or where you work.
- Where you can afford
Are you in a job you intend staying in? None of us like spending hours in traffic, and having commuted from Devonport to Newmarket for years, I love now living only 5 min away from the office, so, look at your work location and draw a circle around it, and decide on some locations based on how much time you are comfortable spending in traffic commuting to work.
Set up your criteria on trade me, ensuring that you only receive the emails of new listing on that set criteria. If your criteria is too broad, I find people get bogged down with too many options and can’t make decisions.
I’ve even suggested to some clients to do a letter drop, but miraculously every time we have gotten to that point, the right house has actually come along.
So far any client that has actually been committed to buying is either still hunting or has managed to find the right property. None have given up yet.