First time buyers priced out

According to QV.co.nz only 9 Auckland suburbs have homes with an average value of less than $550,000.

The latest qv.co.nz E-Valuer suburb stats published in the NZ Herald's Property Report on Monday (June 13) show that all suburbs in the super city saw value increases of between 8 and 20 per cent in the year to March.

It also shows that 72 out of the 167 Auckland suburbs measured now have an average value of more than $1 million and Herne Bay is over $2 million.

There has been much discussion about what you can still buy in Auckland for under $550,000 which is where the KiwiSaver HomeStart Grant cap was set (there have been calls for this to be raised).

There is still more than $10 million in the KiwiSaver first home grant fund and while first home buyers in regional centres find the scheme helpful, Aucklanders typically find it impossible to find a stand-alone home under the scheme's price cap.

The issue appears to be that if they earn enough to service a mortgage at the current cap, they tend to earn too much to meet the strict criteria.

We know that just nine suburbs in the super city had an average value under $550,000 in March and none of these are on the North Shore, in Rodney or in Waitakere City.

Six are in South Auckland including Otahuhu which has an average E-valuer (AEV) of $546,100; Otara is $511,600; Clendon Park is $514,050; Manurewa East $538,550; Randwick Park $535,750; Red Hill $533,250; and Waiuku $537,450.

So while you may be able to find a stand-alone home in these suburbs they are not a good option for many who work in the central city due to the long commute.

Just two of these suburbs are central and include Grafton which has an AEV of $469,900 and Auckland Central which has an AEV of $452,700 where you may find a studio or one bedroom apartment under $550,000.

As many first home buyers will now need to consider an apartment as a first home, the issue is they are often not ideal for families. There are also annual body corporate fees to consider.

Even if an older building hasn't leaked yet, there is a risk it could and this may impact on its value. Some owners have found their apartments become worth less than they paid for it, as well as facing huge repair bills.

The Government is considering bringing in reforms in the apartment sector.

These reforms would focus on better disclosure rules to ensure people know earlier in the purchase process all relevant information about a unit or apartment and the governing body corporate; accessibility of the dispute resolution processes and whether the Tenancy Tribunal is best placed to resolve disputes: and the role of body corporate managers and their legal obligations.

So if you are considering buying an apartment -- as it's your only affordable option to enter the market -- make sure you understand what shared ownership means before you sign on the dotted line.