First buyers still missing out

Photo / Getty Images

With more listings and fewer properties selling at auction it's arguably a good time to buy in Auckland.

However, the drop in values in parts of the housing market has not yet equated to an increase of sales to first home buyers.

According to the latest CoreLogic Buyer Classification Data, Auckland investors account for a 43 per cent share of all sales and first home buyers have dropped back to a low of 19 per cent.

This suggests that even Auckland's most affordable properties may now out of reach for many first home buyers and this is not helped by reports of some banks implementing stricter lending criteria - making it harder to gain finance.

According to the latest QV House Price Index, values have dropped over the past three months in parts of the North Shore, Waitakere, Manukau and the former Auckland City Council's southern suburbs; which include the more affordable suburbs of Blockhouse Bay, Otahuhu, Onehunga and Mt Wellington.

In Otahuhu, it's possible to buy a conjoined townhouse in the $400,000s and a stand-alone three-bedroom home in the $700,000s. While in popular Onehunga, the most affordable stand-alone three-bedroom home on a cross-lease half site is now in the early $800,000s.

But it is possible to purchase one or two-bedroom townhouses or units from $500,000 upwards. In Mt Wellington you can buy a stand-alone three-bedroom home on a half site for $750,000.

In Avondale and New Windsor you can get a two-bedroom duplex for $625,000 but stand-alone houses now go for upwards of $800,000.

On the North Shore, the most affordable suburb is Birkdale and it's possible to buy a small unit for between $500,000 and $600,000, and the cheapest you are likely to be able to buy a three-bedroom home on a cross-leased half site is for around $700,000 - and the property will be a do-up.

In Waitakere, it's rare but possible to buy a three-bedroom Titirangi home for $595,000 on a half site. While in Kelston a three-bedroom home on a 491 square metre section can be found for $650,000.

In Glen Eden, even though values have dropped back 2 per cent over the past three months, you will still need more than $700,000 to buy a small three-bedroom home there.

In Laingholm, which has become popular with first home buyers, it's possible to get a small three-bedroom home there in the $600,000s. And in Ranui, you can buy an entry level starter three-bedroom home on a half site for $535,000.

Some of the most affordable properties in the Super-city region are in parts of Manukau including Otara where you can get a renovated three-bedroom home on a half site for $530,000 and also in Clendon Park where the median value is $554,600.

If you look at what these prices mean in terms of purchasing and then servicing a mortgage, if a bank approves a loan of $700,000, then a buyer will require a 20 per cent deposit of $140,000 unless they can secure a lower deposit loan.

Then they will have to service a $560,000 mortgage which on an interest only loan at 5 per cent interest would be $28,000 a year or $538 a week without paying off any principal.

Add in rates of around $2500 per year which is another $48 per week. Plus insurance of around $2000 a year at $38 a week and maintenance of the recommended budgeted amount of $15,000 a year or $288 per week.

So the cost of home ownership at an entry level price of $700,000 Auckland three-bedroom home is likely to cost around $919 a week, or around $47,788 a year.