Leigh Sullivan is buying his first home at age 52. After travelling the world and living on minimum wage, he says becoming a teacher has finally allowed him to stop paying rent.
Leigh Sullivan is buying his first home at age 52. After travelling the world and living on minimum wage, he says becoming a teacher has finally allowed him to stop paying rent.
Special report: Dawn Picken looks at some of the options available to those saving for their first home.
First-time home buyers have more help than ever getting on the property ladder, say local real estate and finance experts.
And Bay of Plenty residents are taking advantage of new ways to gather a deposit for a first home.
Tauranga Budget Advisory Service manager Diane Bruin said her organisation had started offering a programme in which dedicated coaches helped people save for a house.
"It's a process to help them plan what are their costs are and what they can reduce.
"We look at bank statements with them and figure out how to trim a lot of costs."
Some clients made major changes such as returning to live with family to pay down debt and reach their savings goals more quickly. She said that might not be possible for large families.
"It's the start of a journey. They need to change their habits. It may be stopping buying lunch and taking leftover food to work from the night before; just looking at all the expenses.
"People can't believe that by making a few little choices it can be a lot easier. If you have a goal in mind, you justify why you'd want to go without - because you want your own home."
Mrs Bruin said some families started growing their own vegetables, made once-a-week grocery trips and took take a list.
"One woman said, 'I no longer take my husband with me because we spend an extra $50'."
Mrs Bruin said the service's first-time home buyer programme had room for up to 20 families and was about half full.
The non-profit organisation visited businesses to target wage earners who wanted free help navigating challenges of paying rent, supporting a family and saving a deposit.
"We're encouraging them if one is fulltime and another part-time, if the wife can pick up extra hours, that can go towards a new home."
Mrs Bruin said the service's clients reaped the benefits of thrift. Ten of her total money management clients had saved a collective $75,000 in the past year.
"That's why we took the project on - we wanted to empower people in our community [that] there are other choices they can make and they don't have to keep paying rent."
Ray White franchise owner Greg Purcell said his agents hadn't seen a surge in first-time buyers as a result of government schemes.
"Anecdotally, there's not much change at this point in time. We are hearing auctions are an issue for first-time buyers, because they have to get builder's reports for banks with no guarantee they'll be able to buy. It makes it hard for the first-time buyer if their subject property is going to auction."
Chief executive of Eves and Bayleys Real Estate Ross Stanway said house and land packages available now were affordable for first-home buyers and were increasingly popular.
Rothbury Mortgage adviser Josh Martin, who works alongside real estate agents, said about 80 to 90 per cent of first-home buyers were using Kiwisaver, although it was not always possible to use it as a deposit if it was sale by auction. Because of that inquiries for house and land packages had increased in the past three months, he said.
Harcourts Bay of Plenty general manager/director Nigel Martin said for first-timers, Kiwisaver was "probably the big thing at the moment".
He said first-time buyers were also taking advantage of family loans and more were getting pre-approved. "First-time buyers are talking to mortgage brokers before they look so they know from day one what they can buy."
Rothbury Mortgage Adviser Clive Martin said changes to Kiwisaver that went into effect in April [allowing withdrawal of contributions and tax credits] had been especially helpful for first-time buyers.
He said that despite loan-to-value restrictions that took effect in 2013 (requiring, in many cases, borrowers have at least a 20 per cent deposit for a home loan), "Twenty per cent is not always the case. The Government has a wonderful vehicle called Welcome Home loans - it's just 10 per cent deposit within various criteria the system lays down ...
"We've seen a considerable increase in inquiry of people with a view to getting their first home if not now, then maybe in six months' time."
Mortgage broker Chris Rapson said he had been in the finance game 40 years and the level of advice available to people was more substantial now than at any other time.
"The range of products out there is greater. It's a highly competitive market. Interest rates are coming down, but prices are going up."
Statistics from the Real Estate Institute of New Zealand (REINZ) show an increase in the number of homes sold at or below $400,000: 283 properties sold in the Bay of Plenty in May 2015. REINZ reports 253 such sales in May, 2014.
Building and Housing Minister Nick Smith visited the region this week to talk about HomeStart, a scheme giving young adults more opportunities to buy their own homes. Dr Smith said because home prices in the Tauranga area had been rising for the past year and-a-half, the Government was budgeting $20million in support of first-home buyers in Tauranga City and the Western Bay of Plenty over the next five years.
He said the scheme was a combination of KiwiSaver withdrawals, HomeStart Grants and Welcome Home Loans.
Dr Smith gave an example where a couple on a typical wage in Tauranga would have built up $25,000 over five years in their KiwiSaver accounts.
"We live in the 'now' generation and young people want to do what all their friends are doing and there's nothing left over to save. You have to be different than the average person if you want to save for a house.
"A lot want the cappuccino on Saturday morning and beers on a Friday night. You can do that, but you're not going to get a deposit for a house."
Long road home starts with steady savings plan
Leigh Sullivan has taken the long road to owning a home.
Te Puke High School teacher Leigh Sullivan has finally bought his first home. Photo / John Borren
He's 52 years old and has rented his entire adult life.
"When you're making $14 an hour, you don't get to save money." He's now paying $250 per week for a home he's helping to fix.
"I travelled for 22 years around the world, then came back and had kids. I've only recently become a teacher. Up until then, I was living on minimum wage."
He teaches maths at Te Puke High School and says he decided to attend university after being a jack of all trades, with jobs including freezing worker, pet company employee and drinks server. He had started teaching about six years ago, paying off his $36,000 student loan while saving for a home.
"It's taken six years to get $30,000 [for a deposit]. I'll access my KiwiSaver, which is $20,000. The rest I saved, putting in a couple of hundred dollars a week. I had $5500."
He said a Government grant would provide another $3000 for his deposit.
He had spent six or seven months looking for a house, putting in about 20 offers and losing many potential sales to investors.
"I gave up on auctions. I kept getting outbid."
His $293,000 offer for a home in Papamoa off Hartford Ave was accepted this week.
He's grateful a real estate agent's tip secured him first position. "They have five back-up offers, all over $300,000."
His advice for other first-time home buyers was to save more than 10 per cent for a deposit.
"Because with just 10 per cent, banks dictate what's required before you can get the house.
"They make you get a registered valuation, which is $700."
Mr Sullivan said he shopped around and got a deal with ANZ that would pay $2000 to cover his registered valuation and lawyer's fees. If all went to plan, he and his two teenage children would soon have a three-bedroom home one block from the beach. "It's not bad. I was pretty happy to get it."Dawn Picken
