5 Top Tips on First Home Buyer Advice For Your Children
These may seem obvious, but we see many many first home buyers at our open homes and many are quite naive.
1. Understand how much you can afford.
This is not about the price range you are looking in, it’s more about knowing how much you can afford to pay for your mortgage. So, make a weekly/monthly budget and see if you can stick to it. Banks are still stress-testing mortgage applications quite hard, so having a budget and being able to show a bit of history at sticking to it can really help your chances of getting a mortgage.
2. Once you have that sorted, contact a reputable mortgage adviser.
This is probably obvious, but until you have done this you will not be sure of how much you can spend on your house purchase.
3. Look for properties with potential, not perfection.
We see lots of first-time buyers coming through open homes and commenting that they need a home with an ensuite or a bigger kitchen, etc. Buying something without an ensuite, and adding one later may seem like an inconvenience, but will pay dividends in the long run – the right home improvements can make a huge difference to your property’s value.
4. Part of this is deciding on what you will compromise on, and what you will not.
This will of course depend on your stage of life – if you plan to start a family soon you will obviously need something that can grow to suit your upcoming needs.
5. Consult the professionals:
Don’t be afraid to spend money to be sure you are getting what you pay for: Get a building inspection, use a mortgage adviser, use your solicitor.
Where Is The Auckland Housing Market Heading? – October 2022
Have we reached the bottom of the market or does it have further to fall?
Nobody really knows the answer to either of these questions right now.
What we do know is that prices for properties in the central Auckland suburbs have dropped by around 20% since October 2021 – that equates to around $51,000 per month on the median price for Auckland.
That’s great news for people looking to buy of course. In fact Auckland has just been ranked the eighth least affordable city in the world for housing, with prices more than 11 times the median household income.
This is still high, but five years ago we were fifth behind Hong Kong, Sydney, Vancouver and Melbourne, so the recent price drops have certainly helped to potentially get more people into the housing market. but maybe not so good for people who are selling right now.
But there is some light at the end of the tunnel for sellers
According to Tony Alexander’s latest real estate agents poll, agents report more first-home buyers in the market, more people attending open homes, and an increase in requests for property appraisals.
However, buyers remain concerned about rising interest rates, access to finance, and continue to fear overpaying.
In our opinion, we are certainly seeing more activity in the market now, and we expect that to continue, or increase, over the next couple of months.
At the end of the day, there are property owners who have to sell, for whatever reason, and people who have to buy. In other words, whatever the state of the market, there are people who need to transact in property.
There is no doubt that buyers are unsettled but this can change in a heartbeat
Finance rates are still comparatively low (and according to most economists, unlikely to increase hugely in the foreseeable future) and there are plenty of properties for buyers to choose from.
As soon as the market sentiment changes (which it undoubtedly will – it’s just that no one knows when) and power changes back to the seller, prices will begin to rise.
As we said last month, it is almost impossible to pick the bottom of the market, but once it is clear that the bottom has been reached, things will change fast.
One of the drivers for house prices is supply
This is influenced by the number of new builds.
Since 2019 the number of new home completions peaked in the middle of 2021 and has slowly but steadily declined ever since, although the latest figures suggest the decline may have started to flatten out.
About 1500 fewer new homes are being built in Auckland each year compared to when the market peaked in the middle of last year, and the latest figures from Auckland Council show it issued 12,874 Code Compliance Certificates (CCCs) for new dwellings in the 12 months to July this year, which was 1507 less (-10.5%) than in the 12 months to July last year. (Code Compliance Certificates are issued when a building is completed and are the best measure of new housing supply).
This means that demand may start to exceed demand, particularly when immigration begins to return to normal levels. Again – this will put pressure on buyers, not sellers.
Is it a good time to upsize?
If you’ve been thinking about selling your house to move to a bigger place, now might be a good time to try.
Property data provider CoreLogic looks at the gap in median values between three- and four-bedroom properties as a proxy for how much people would need to pay to “trade up” from a starter home to their next house. As of October 2022.
It found that in central Auckland, Waitakere, Manukau, central Wellington and Dunedin, the price difference had become smaller, year-on-year.
“That said, it wouldn’t be a surprise to see the trade-up gap generally continue to shrink in the coming months – given any particular percentage fall across the market as a whole translates into a bigger dollar fall on higher value stock.”
“In other words, that will make trading up a little easier, especially with more listings and choices now available too.”
So if you agree that now is a great time to be buying, especially for your children, here’s some advice for them…
Comments? Questions? Please contact us at thestones@raywhite.com.