Is it becoming harder to buy a first home? Photo / Getty Images
For Carly McMechan and her family, the hunt for their first home has been an almost two-year battle with no end in sight.
The family decided to look at buying a home when they realised how much they had spent on rent in the 18 years they had been together.
They have lived in their rental for 13 years and, while there is no pressure to leave, eventually the landlord wanted to move back upon retirement.
McMechan, her husband and their two teenagers are looking for a home in the Otumoetai area with a garage and yard in the $700,000 to early $800,000 mark.
"I'm going to every open home in the area pretty much. The bank has got so many conditions we can't buy at auction and 99 per cent of houses in the area are going at auction.
"We say 'we'll just give up' but it could be tomorrow the landlord rings."
McMechan is one of many people on the hunt for a first home and new Stats NZ figures show nationwide, home ownership has continued to decline to the lowest level since 1951, sitting at 64.5 per cent in the 2018 census.
Home ownership in the Western Bay of Plenty and Tauranga City sits well below the national trend, at a respective 52.8 per cent and 49.9 per cent for the same period.
However, the areas have bucked the national trend.
In the Western Bay, home ownership increased from 46.9 per cent in the 2013 census and in Tauranga City, it increased from 46.3 per cent.
Broken into age brackets, data shows Western Bay home ownership in the 15-29 and 30-64 age groups increased between 2013 and 2018, going from 6 per cent to 10.8 per cent and 65 per cent to 69 per cent respectively.
Meanwhile, those in the 65-plus age bracket remain the group with the highest percentage of home ownership (79.7 per cent), although it did decrease by 0.6 per cent over the same time period.
In Tauranga City, home ownership in the 15-29 and 30-64 age groups also increased between 2013 and 2018, going from 7.7 per cent to 10.2 per cent and 59.7 per cent to 63 per cent respectively.
Home ownership in the 65-plus age bracket dropped from 78.7 per cent to 76.9 per cent between 2013 and 2018.
CoreLogic data on first-home buyers' market share in the two regions shows a minor variance in the percentage of sales going to first-home buyers between 2006 and 2020.
In 2006, first-home buyers accounted for 17.7 per cent of all house purchases in the Tauranga City area. In 2020, that figure sits at 17.3 per cent.
In the Western Bay it moved from 12.4 per cent in 2006 to 14.5 per cent in 2020. The national average for 2020 is 24 per cent.
First-home buyers were least present in both markets in 2010, when they accounted for just 7.8 per cent of purchases in the Western Bay and 14.6 per cent in Tauranga.
In comparison, first-home buyers had a market share of 24.9 per cent in Rotorua in 2020.
McMechan believes their $700,000 to early $800,000 budget is among the most common and many of their friends have given up trying in Otumoetai and gone to the Lakes or Pāpāmoa.
"Our kids go to school at Otumoetai, our kids' friends are here, our families in this area. We don't want to have to move."
According to the Priority One September 2020 Quarterly Economic Monitor for Tauranga City and the Western Bay, the average median house price was $745,000 in Tauranga, up 9.5 per cent on the year prior.
In the Western Bay, it was $690,000, up 11.4 per cent.
The Government's First Home Grant, which offers up to $10,000 for a couple to help them into their first home, can only be used if the price for an existing home in the area does not exceed $500,000.
As of the end of last week, 86 results were returned when searching realestate.co.nz for available properties under $500,000 in Tauranga and the Western Bay, 36 were in Tauranga.
Of those, 61 were section-only listings and nine were apartments or units.
Of the remaining 16, two were asking for offers over $499,000 and six were in outskirts like Katikati, Te Puke or Maketū.
Despite all these factors influencing the market, the level of difficulty to get on to the property ladder has not changed, property commentator Ashley Church, of OneRoof, says.
"It's always been difficult and perhaps it should be. There's something to be said about having to work hard for something and the appreciation that comes from that.
"You hear of couples who are losing out on house after house and they become discouraged and despondent but then they finally close on a home and their whole perspective changes."
Church said it was significantly cheaper to service a mortgage now than it was 30 years ago.
"The number of houses coming up for sale is tight at the moment but we will see that loosen over the next couple of years as prices rise and more people will want to sell to take advantage of that."
Simon Anderson, chief executive of Realty Group, which operates Eves and Bayleys, said it had never been easy to buy a first home and that was true today.
"As property values have increased at quite rapid levels it's making it more and more difficult.
"We're seeing first-home buyers becoming more creative and flexible in purchasing whether that's moving to a less desirable area to get on the ladder or whether it's buying with family.
"But I would have thought we've seen, across the Bay of Plenty, more first-home buyers than before."
Anderson said since Covid-19, there had been more interest from first-home buyers but the First Home Grant was "not relevant to our market".
He said Tauranga had not traditionally been "first-home buyer territory" but they had seen more young people relocating and even people buying and living in Rotorua and working in Tauranga.
He said people needed to acknowledge their first home wasn't likely to be their last and make compromises.
"It takes time to get to where you need to be.
"If you want your forever home to be the first one you're going to be waiting a long time."
Tremains Bay of Plenty general manager Anton Jones said there had been an increase in first-home buyers hunting since Covid-19 and lower interest rates could contribute to that.
"Obviously it's hard because prices are going up and they are competing with investors more often. We're seeing first-home buyers tend to pay a little bit more because they want to secure the property."
He said the hardest part about buying property was saving the deposit.
Following that, the debt needed to be serviceable but low interest rates helped with that.
"You can borrow a lot more and pay less. It's more affordable to borrow now than it was. People can have a big loan provided they can service it."
While first-home buyers can draw on Kiwisaver and a First Home Grant, Jones agreed the grant's $500,000 threshold needed to be reviewed.
Tauranga Harcourts managing director Simon Martin said they had seen more first-home buyers. Some had savings for overseas trips they had decided to invest due to the current climate.
"Over lockdown if people were still getting paid but didn't have a lot to spend it on so that accelerated savings and brought them into the market."
He said a decrease in interest rates and an increase in rents also encouraged people to look at buying and agreed the First Home Grant threshold needed to be looked at.
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