In June 2021, the Herald spoke to eight singles, siblings and families dreaming of that first step on the property ladder. They told of bitter disappointments, but also home ownership hopes that wouldn’t be beaten by rising prices, competition from investors, pandemic disruptions or cost-of-living pressures. Since then, six have
Home Truths: First-home buyers feel interest rate, cost of living pinch
Harley Neville at the KiwiBuild home he bought in Auckland's Māngere Bridge in January. Since 2021, the Herald has been following the fortunes of Neville and seven other aspiring first-home-buying singles, siblings and families. Photo / Dean Purcell
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A further 1238 are under construction or pre-construction.
But for the Auckland film and TV freelancer and his 24-year-old army engineer brother who began saving for their home ownership dream seven years ago — when median house prices in our largest city hovered in the mid-$800,000s and one-year interest rates sat near 4.8 per cent — only one place to call home is enough.
Home ownership gives them, their 17-year-old sister and the mum who raised them on the domestic purposes benefit not only a fallback home base, but an asset to grow wealth, says Neville, 40.
“Mum’s rented her whole life, and all us kids grew up in rentals and moving all the time, so the idea of buying a house with my brother was, ‘Let’s do something that can help raise our family up out of the dirt’.
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“It’s good for everyone — it gives us options in the future.”
The brothers turned the key on their $700,000 Māngere Bridge home in January, putting down $280,000 and using their combined income of about $150,000 and a flatmate to cover a mortgage fixed at 7.09 per cent for 18 months.
The pair, who nearly bought in early 2020 before Covid-19 scuppered their plans, didn’t even have to enter a ballot for the three-bedroom, 1.5-bathroom townhouse boasting a yard that “wraps all the way around” and a designated car park on the street.
“We just applied and were approved”, Neville says.
“The house was valued at $825,000 and we paid [the reduced KiwiBuild price of] $700,000, so maybe missing out in 2020 wasn’t so bad after all.
“The property prices are starting to recover, and the interest rates are hopefully starting to go down, so we might’ve got in at a good time — hopefully.”
‘So happy’: Auckland house price escapees
“It’s a fool who looks for logic in the chambers of the human heart”, says George Clooney’s O Brother, Where Art Thou? character, after his pragmatic act of thievery rubs a fellow fugitive the wrong way.
The same could be said of a residential property market at the bottom of the world, and its wild price fluctuations — most recently when national median prices rose $178,000 in a year to peak at $925,000 in November 2021. They’ve since dipped to $790,000 last month.
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The Real Institute of NZ figures also show median prices in our biggest city increased from $1.03 million to $1.3m in the year to November 2021. Last month they were at $1,026,000, with both national and Auckland prices up on January.
Surging interest rates and cost-of-living rises also cruelly combined to thump our newest entrants to the property market as the country battled the latter restrictions of the pandemic, and the Reserve Bank chimed in with an engineered recession.
But it’s usually the advice of experts that when you’re financially ready for home ownership, don’t wait — buy.
It’s something Kelly Gander wishes she and husband Blair had done as the couple chased their first home dream in the competitive Auckland market three years ago.
Anxious to ensure a mortgage didn’t send them backwards financially, the couple held off buying a house as they started their family in 2016.
“We basically cost ourselves more than $400,000 over those five years, and we’re on a similar income annually as we were five years ago”, Gander told the Herald in 2021.
“It’s heartbreaking … [but] we refuse to give up.”
Ditching their lifelong home of Auckland was the key that unlocked the family’s future soon after, aided by fortuitous timing when settlement on an $867,000 doer-upper in rural Northland passed three days before the August 2021 Covid-19 lockdown.
“We’re so happy here”, says Gander of their their three-bedroom home on a 4ha block in Maungakaramea 23km southwest of Whāngārei.
“The boys can bike around, they can climb trees. It was exactly what we wanted for them … and we managed to not overcommit ourselves financially.”
Their youngest switched from daycare to free kindy, and she also has a new job, but with lingering inflation — 4.7 per cent for the December quarter — and three boys under 8 who “eat like they’re 17″, the couple are “still very much budgeting”.
“But the kids are not without, and I think we’re doing well despite the current financial climate.”
The couple, both 35, fortunately ignored their mortgage broker’s 2021 prediction interest rates would go negative, instead locking their 80 per cent loan into three, four and five-year tranches between 3.24 and 3.79 per cent.
The mortgage gobbles about 40 per cent of their household income, and while it’ll hurt, they’ll survive the first rate rollover of $100,000 in June.
The next, in 2025, is $200,000, followed by $300,000 in 2026, Gander says.
“If we’re still looking at sort of 6 per cent [in 2025], we probably won’t survive that unless one of us can get a higher income.”
But they won’t give up the stability home ownership gives their kids without a fight, the search and rescue co-ordinator says.
“If [future interest rate increases] are too great, we may have to downsize. But that’d be a last resort.
“I’ll fight tooth and nail to keep this place for the stability, and for the community we’re in.”
First-home ownership ‘a squeeze’, says single Christchurch buyer
“You’ve just got to hang in until it passes and then eventually, things are better again”, says Samantha Julian, a homeowner since pipping an Auckland investor at auction right on her $560,000 limit in October 2021.
The then-teacher had given up buying in Wellington, taking the $120,000 she’d saved in her day job — and nannying at night and on weekends — to a new city, Christchurch.
Like Neville, she wanted a home for her family whenever they need.
“My mum has been a single parent, a widow since I was a baby, and she could never afford to buy a home. Neither can my brother, being on his own.
“A first home for me is a shared home for the three of us.”
At her three-bedroom cross-lease home in Hornby, the 35-year-old’s hosted family got to know her neighbours, planted vege and berry patches and flooded the garden with colour.
And while beautiful yellows, purples and pinks lift the spirit, they don’t pay the bills.
When her initial two-year interest rate of 3.79 per cent rose to 6.89 per cent last year, Julian had to find another $400 a fortnight.
Meanwhile, a career switch had put her at the bottom of a new pay scale, a short-term sacrifice for a safe government job with opportunities for promotion.
“Things are definitely more of a squeeze, and I guess it’s the case for so many people, isn’t it?”
Sometimes Julian, who lives alone, wonders if she should’ve waited for a home that better suited her needs — including space for a granny flat for her mum.
“It’s much harder now [with] much-higher interest rates. At the time you’re in such a rush to find a house, the emotion goes out the window — it’s just about getting in.”
She encourages others from non-home-owning backgrounds to get good advice.
“I never really learned that people can structure loans differently and set them at different interest rates — and I had a broker, but no one explained it to me.
“It’s only when my interest rate was going up that I found a really nice person at the bank, and he spent about half an hour talking to me about it.”
Advice from later-in-life first-home buyer
Fellow late-2021 first-home buyer Shelley had the opposite problem — her mortgage broker did give advice.
Bad advice.
When the then-49-year-old bought a $700,000, three-bedroom home in northwest Auckland’s Parakai, her 15 per cent deposit meant copping a 0.3 per cent low-equity penalty, prompting her broker to recommend the one-year 2.85 per cent interest rate.
“[They said] by that time my equity would increase, and I’d be able to get rid of the penalty. But the market went a bit pear-shaped.”
Her latest rise, in August last year, took her from 4.86 per cent to 7.5 per cent, locked in for 18 months, says Shelley, who, like several of our first-home buyers, asked that her full name not be used.
“[It] hurts, especially with renovations. But I can still manage — just.”
Her 1980s-era home — which was missing parts of the kitchen when she bought — has been an ongoing improvement project, with all her costs aided by her “hoarder mindset”, large freezer and booming garden, Shelley says.
Years of living frugally after leaving an abusive relationship to raise her now-grown daughter alone also help, along with her give-it-a-go DIY efforts.
“I had no idea regarding painting … but people say it looks good and are surprised I did the work. Not sure if that’s a compliment or criticism.”
A company car and $30,000 pay increase to about $120,000 also helped with cost-of-living increases, including a $500 jump in insurance after Cyclone Gabrielle, and has saved her from supplementing her income with weekend retail or fruit-picking shifts.
Meanwhile, she needs a new oven, and a burst pipe recently damaged her kitchen — insurance covered a new floor, but not cabinets.
But she has no regrets, just happiness, Shelley says.
“Prepare for the worst, always make sure the freezer’s full, become frugal like your grandparents did in wartime and don’t even try keeping up with the Joneses — they’re probably only surviving on debt anyway.”
The fear of job loss
There’ll be a time they can relax, says Auckland mum Kayla, on life two years after she and her husband became first-home buyers in the North Auckland beach suburb of Manly.
“But maybe it’s just when we’re old.”
The parents of three were on the cusp of moving to Christchurch or Australia after 18 months of open homes, failed offers and out-of-reach auctions, when their fortunes changed.
“When we started we were looking at houses for $750,000. By the time we bought we were up to a million dollars.”
Their $1.05m, 1970s-era two-storey house with four bedrooms, two bathrooms, a basement and a section big enough for a trampoline, deck and spa pool remains a happy home, Kayla says.
But with the country officially in recession as of last week, lingering inflation and rising lay-offs are a worry, especially with spending in the public sector — where they both work — in the Government’s sights.
With a household income of $260,000, they can make the fortnightly $2000 mortgage payments, fortuitously locking their 80 per cent mortgage in at 4.99 per cent for three years in 2022.
Even if that rises to 7 per cent interest after next year’s rate rollover, they can do it — just — but only if they keep their jobs, Kayla says.
“The company I work for, and the company my husband works for, are talking about significant cuts. But I’m trying to focus on the things within our control, versus worrying about the ‘what ifs’.”
That includes sticking to a budget, albeit under constant pressure as the cost of living bites.
“Rates are going up, water’s up, power’s up, and I got a notification that broadband and cellphone are going up. I’m just waiting for daycare [now].”
Fortunately, only their youngest child is still in care, with an almost $400 boost a fortnight on the way when he goes to school next year.
Overall food price inflation eased to 2.1 per cent in the year to February — the lowest since the year to May 2021, including an almost-10 per cent drop in fruit and vege prices.
That’s good news for Kayla and her husband, 40, who try to give their kids a well-balanced diet.
But it still mightn’t be enough if other costs keep going up, the 36-year-old says.
“Then it will be more like baked beans on toast and more processed food, which isn’t the best. But, if you’ve got to survive, you’ve got to survive.”
She doesn’t regret buying — only that they didn’t do it sooner.
“We could’ve, but we just kept getting told how hard it was. [To aspiring homeowners], have conversations earlier because information is power.
“Even with these little worries and money challenges … we got something that’s going to be suitable for our family long term. We’re lucky, and we’re very happy — every so often I’ll just smile or be happy because, you know, this is our home.”
‘There’s nothing more satisfying than paying your own mortgage’
Fellow Aucklander Kylie and her husband have also snared a million-dollar home in our largest city.
The couple suffered repeated house-hunting heartbreak in 2021, sometimes seeing homes they’d missed out on remain unsold.
“The most gruelling aspect of buying a home in New Zealand — well, Auckland at least — is the vendors have become greedy”, said Kylie in 2021.
But six months later the couple were the proud owners of a home in the South Auckland suburb of Hillpark.
The couple, parents of a teenage son, paid just over $1m, with a deposit just shy of 20 per cent and a household income of $140,000.
They fixed two-thirds of their mortgage at 4.99 per cent for three years and the remaining amount at a lower rate for two years — which they refixed in December for a year at 7.69 per cent, Kylie says.
Small increases in their income have taken the edge off increasing costs, but it’s still been “tough” for her and her husband, 47.
“We have to sometimes jiggle things around, but so far we’ve been ok … we’re making things work”, the 42-year-old says.
Small renovations are under way, gratitude is ongoing.
“It was very stressful buying in the height of the housing market, and just a relief for it to be over … there’s nothing more satisfying than paying your own mortgage, instead of someone else’s.”
The rent trap
For now, that’s a trap still-hopeful first-home buyers Tim and Robyn remain stuck in.
Tim wants to live alone, close to the central city or good public transport, and in a building not in need of major remedial work such as earthquake strengthening.
But the single Wellingtonian’s plans have been on hold since 2021, when median house prices in the capital skyrocketed to $1m in October that year. They’d fallen to $800,000 by last month.
He still has a job earning about $90,000 a year, and about $40,000 in KiwiSaver, but for now remains in a two-bedroom Kelburn house share where he and a flatmate split the $600 rent.
“I’m still putting into my KiwiSaver, but the cost of actually buying a house and the mortgage [costs] keeps going up.”
Last year, the 46-year-old took aim at bank profits at a time of increasing interest rates.
“It’s capitalism and economics … the system and culture just don’t allow people to get ahead.”
He still hopes to own one day, but is relieved he didn’t buy in 2021 — not that he was in a position to.
“Interest rates have now massively gone up, and some can’t afford to live … all sorts of things have gone wrong.”
A right-leaning Government was seen as medicine for the country’s economic ills for a majority of voters last year.
But Tim isn’t expecting much for those like him.
“They help people who already own homes, especially multiple homes and businesses … not people trying to buy homes.”
Over the strait and 300km south, Robyn, too, is still looking for that elusive first home, the one that’ll give her stability and fulfil her dream of dog ownership.
The health professional nearly bought in Christchurch on the eve of the pandemic, before moving to Hamilton where she then found herself priced out of a rising market.
Back to Christchurch she went, but a heart condition and injuries from a car crash slashed her income.
She’s got her health and income back, but house hunting remains on the to-do list — for herself at least.
“I’m still renting but I’ve also met a new partner, and he’s just bought a new house. We’re not living together, but we’re in the process of talking about it.”
Although her partner bought alone, he involved her in the process, the 45-year-old says.
“He’s pretty much saying to me, ‘This is your house too if you want, when you’re ready’.”
She may eventually put her $120,000 deposit into the mortgage, or use it for an investment property — she’s been told she can borrow about $400,000 on her present income.
Although things are going well, she’s old enough to know relationships can break down, Robyn says.
“I think it’s always wise, if you’re able to [while single], get a home of your own. If I look back on my life, I’d have tried to get into the housing market earlier, that would just make me feel a bit more financially secure for the future.”
Cherie Howie is an Auckland-based reporter who joined the Herald in 2011. She has been a journalist for more than 20 years and specialises in general news and features.
