House prices rise to record average

Shannon Thorpe moving into his new home in Three Kings. Photo / Doug Sherring

The average house sale price in Auckland hit $580,000 this week and new housing statistics have identified increasing numbers of suburbs that are depressingly out of reach for first-time buyers.

Barfoot and Thompson managing director Peter Thompson revealed that his company had achieved an all-time high average selling price of $581,190 in Auckland in March.

"It was a month's trading that came out of the blue and exceeded anything we have ever experienced."

There were 1070 properties sold, a massive 75 per cent up on February and 15 per cent up on March last year.

Though the average was inflated by 14 sales at $2 million plus, Thompson said the average without them was still more than $560,000.

He believed buyers had reached the conclusion that values were at the bottom of the price cycle, the economy was looking likely to rebound in the next year and interest rates were historically low.

The merger of Auckland's councils and a looming housing shortage for the city - 50,000 homes short of what it would need in 30 years - were other reasons for a rebound in housing confidence.

In the wake of the new figures, QV.co.nz research director Jonno Ingerson investigated how affordability for housing in Auckland has shifted in different suburbs over the past decade.

One expert said it was big earners without children who were the most likely to be able to buy now.

John Bolton, who runs his own mortgage advice business, Squirrel, said there was a surprisingly large group of 30-something, double-income earning professional couples with no kids who wanted to buy. They had generally not been able to afford to buy at the peak of the market, but were now armed with good deposits, were excited by low interest rates and earned a combined income of more than $100,000. He had had to remind some to think of the future - they would still have to pay the mortgage if they had children.

He said most of this group initially wanted the same thing - to go into popular suburbs that used to be affordable a few years ago such as Sandringham, Onehunga, Ellerslie and One Tree Hill. But they soon changed their minds when they saw what their money could buy.

"You could barely get a deceased estate with a kitchen from the 60s in Sandringham now for half a million," he said.

When customers realised they could only afford a "shitbox in Sandringham" or a "carpark in Grey Lynn" they looked to the "fringes".

Bolton said good buying could be had for the early $400,000 mark in Te Atatu Peninsula, Glen Eden and Birkdale.

BARGAINS FOR THOSE ON THE PROPERTY LADDER

This weekend Shannon Thorpe moved into his new home in the Auckland suburb of Three Kings - and he says he could only afford the central city pad because he got on the property ladder years ago.

The 32-year-old, who works for DB Breweries, and his 29-year-old wife Frances, who's in advertising, paid $542,000 for their three-bedroom 1940s state house set on 700sq m of land. They bought it pre-auction and managed to secure it for below the current average selling price for Auckland homes - $581,190.

Shannon said they had a sizeable mortgage, but were able to buy the house because he had been on the property ladder since 2003 when he bought his first house in Tauranga.

When it doubled in price during the boom, he was able to afford a home in Ellerslie about three years ago.

He said it helped that he and his wife did not have kids and both earned good professional salaries to be able to service the mortgage.

He said he did not know how a first-home buyer would be able to afford a house in the central city.

"It's hard to have the quarter-acre dream."

The couple originally looked in Ellerslie and Onehunga for their new home, but found those areas too trendy and pricey.

HIGH INCOME MAKES A FIVE PER CENT DEPOSIT ENOUGH

Couples with a high combined income need only a 5 per cent deposit to get into a home selling for $581,000, the current average in Auckland.

I called six of the major banks this week in the guise of a first-home buyer, to see what combined income and deposit was required for me and an imaginary partner to get a $581,000 house in Auckland. I said we had no kids, a joint income of $150,000, student loans of $20,000 and credit card debt of $5,000.

Several banks wanted only a 5 per cent deposit, and others said there was flexibility.

ASB said it "should not be a problem" to get a $551,000 loan if we had a $30,000 deposit.

The National Bank said their standard policy was for a 20 per cent deposit - about $116,200. They could take a 10 per cent deposit if the loan were to be repaid over a shorter term. An interest rate of 6.99 per cent, paid over 30 years, would mean a monthly payment of just over $3000.

The BNZ would take a 5 per cent minimum deposit, which would be $29,050, but a deposit of less than 15 per cent would incur a low-equity lending premium of 0.5 per cent extra interest. The lending specialist also mentioned a $400 establishment fee.

ANZ's lending specialist wanted "at least 20 per cent" - $116,000 - but there was "room for movement". He said my borrowing power could potentially be "quite high".

Westpac lent "up to 95 per cent of the home's value", but ideally wanted a 10 per cent deposit - $58,100.

Kiwibank wanted an absolute minimum deposit of 5 per cent, but less than 20 per cent would require mortgage repayment insurance. A loan of $552,000 would require a joint income of $90,000 before tax and a clear credit history.