Owning a three bedroom house with a quarter acre section is one of the goals many New Zealanders aspire to. Yet it is becoming not only more expensive, but also a lot harder to own your own home in many parts of the country. Is renting a home for life the way forward for most of us?
Last year the Reserve Bank instructed banks that no more than 10 percent of their customers could borrow more than 80 percent of their home purchase price. This was introduced to help cool down the heated property market which has seen property values reach record levels, particularly in Auckland and Christchurch.
While house sales have dropped considerably as a result of this loan to value ratio restriction, property prices have continued to rise, but at a much slower rate. However home buyers now also face rising rental rates while they struggle to save a much larger deposit for their home than they initially thought they would need.
Are Rental Properties Our Homes For The Future?
As more people step out of trying to achieve homeownership because of costly real estate and unachievable savings goals, landlords are snapping up new rental properties. This is leading to a shortage of available properties for sale on the market, which is only boosting the already high prices of houses that are for sale.
Renting then becomes more popular, which leads to a shortage of rental properties and higher rents because of it. Unfortunately only 15,000 of the estimated 20-25,000 new building consents are being approved in New Zealand each year, meaning that a housing shortage seems to be on the cards for a while to come.
How Can New Zealanders Afford To Buy A Home?
Saving a deposit for a house is hard, but you can source your money from different areas. Cashing in your Kiwi Saver is one way and many new homeowners have also been getting part or all of their deposit from their parents. Banks are lending to buyers who have less than a 20 percent deposit, but just not to as many as they used to. Approaching a mortgage broker who can assist with discussions with a range of banks on your behalf can be very successful in getting that mortgage with a small deposit.
Moving to a less populated suburb or city is also another way of making property ownership more viable. Buying a house that requires some DIY, can also work out significantly cheaper. Just remember to undertake a professional and thorough property inspection to ensure you know what you are getting yourself into!
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