Has it become too hard to get on to the property ladder in Rotorua? Photo / File
Record house prices month after month, low interest rates creating more competition, a cap on the first home grant that doesn't match current house values and a severe housing shortage.
Has this perfect storm of factors pulled the property ladder out of reach of first-home buyers?
Or has it always been difficult to buy a home and the factors making it hard have just changed?
Stats NZ released new figures this month showing nationwide, home ownership has continued to decline to the lowest level since 1951, sitting at 64.5 per cent in the 2018 census.
Rotorua's home ownership sits well below the national trend, at 51.8 per cent for the same period.
However, home ownership in the city has bucked the national trend, increasing from 49.9 per cent in the 2013 census.
Broken down into age brackets, Rotorua data shows home ownership in the 15-29 and 30-64 age groups increased marginally between 2013 and 2018, going from 7 per cent to 10.5 per cent and 58 per cent to 60 per cent respectively.
Meanwhile, those in the 65+ age bracket remain the group with the highest percentage of home ownership (73 per cent), however, it did decrease by 1 per cent over the same time period.
CoreLogic data on first-home buyers' market share in Rotorua shows little variance in the percentage of sales going to first-home buyers between 2006 and 2020.
In 2006, first-home buyers accounted for 23.7 per cent of all house purchases in the district. In 2020, that figure sits at 24.9 per cent. The national average is 24 per cent.
First-home buyers were least present in the Rotorua market in 2010 when they accounted for just 18.1 per cent of purchases.
In comparison, first-home buyers had a market share of 17.3 per cent in Tauranga in 2020, and 17.7 per cent in 2006.
According to the Infometrics September 2020 Quarterly Economic Monitor for Rotorua, The average current house value was $522,706 up 13.9 per cent on the year before.
However, the Government's first home grant, which offers up to $10,000 for a couple to help them into their first home, can only be used if the price for an existing home in Rotorua does not exceed $400,000.
As of December 10, 52 results are returned when searching realestate.co.nz for available properties under $400,000 in the Rotorua district.
Of those 52, just nine had listed prices, five were outside the city and 15 were section-only listings.
Despite all these factors influencing the market, the level of difficulty to get on to the property ladder has not changed, property commentator Ashley Church, of OneRoof, says.
"It's always been difficult and perhaps it should be. There's something to be said about having to work hard for something and the appreciation that comes from that.
"You hear of couples who are losing out on house after house and they become discouraged and despondent but then they finally close on a home and their whole perspective changes.
"When they're in the middle of it all, they will say the system is broken and unfairly weighted but once they are on the ladder, they love capital gains."
Church said nationally, first-home buyers had been the dominant group in the market for the past few years, buying more houses than any other group.
He said it was also significantly cheaper to service a mortgage now than it was 30 years ago.
"If you look 30 to 35 years ago, it required 52 per cent of your income to service a mortgage. Today it's 37 per cent which is a dramatic drop.
"The number of houses coming up for sale is tight at the moment but we will see that loosen over the next couple of years as prices rise and more people will want to sell to take advantage of that."
Local property experts say the market is not impossible for first-home buyers, rather potential buyers need to get creative about how they get on to the property ladder.
First National principal and REINZ Rotorua spokeswoman Ann Crossley said the property market was difficult but there were still options for new buyers.
"All these factors are making the market very difficult but it's not impossible.
"It is tough out there for any buyer but particularly for first-home buyers and owner-occupied owners, there's the emotional element to buying that's not there with investors because what they're buying is not just bricks and mortar, it's where their family is going to be.
"I think we will see a lot more use, where possible, of the bank of mum and dad and we will find people starting to use different strategies in order to buy, like friends going into a property together."
Crossley said it was important potential buyers had realistic expectations and were willing to compromise.
She said there were more hoops to jump through with financial institutions than there used to be but "money has never been cheaper".
"When we were first-home buyers, the interest increased from 14 to 21 in a matter of months. That was 34 years ago and our mortgage repayments went up $250 per month."
When asked whether she thought the current market would become unattainable to first-home buyers if nothing changed, Crossley said there were still ways buyers could get on the ladder at a reasonable price point.
"I've told buyers who simply can't afford what they want to buy something they won't live in. They can rent it out while renting something they do want to live in. At least then, in a couple of years when you've built some equity, you will be able to buy something you can live in."
She said lifting the cap on the first home grant would "tinker around the edges" of the issue but in order for the market to improve, increasing housing stock was the key, which was not a short-term fix.
Professionals McDowell Real Estate co-owner Steve Lovegrove said in the "history of man, buying a home has never been easy".
"The risk you take by taking out your first mortgage, the commitment of buying something so substantial, the long-term repayments, for a lot of young people these are really daunting things and some don't get on the property ladder simply out of fear of these aspects, no matter what the prices are.
"I bought my first house in the early 90s and we thought they were expensive then. The discussion around 1990 to 1993 was how house prices were skyrocketing.
"The only thing where house prices have changed in the past 30 years is there's a marked difference between the multiplication on average incomes to the average price of houses.
"However, to counteract that, there's also a marked difference in the interest you would have paid 30 years ago on a mortgage and what you are paying now.
"The cost of money has outweighed the cost of houses in terms of its relativity to incomes."
But Lovegrove said if interest rates began to increase again, the housing market would lose that balance.
"The cost of money can't go lower so if the cost of houses keep going up, there would no longer any mitigating factors. That's my concern."
Ownit Rotorua manager and registered financial adviser Haley Hubbard said many people were struggling to get on to the market but home ownership was still achievable.
"More people are having to include their parents or are having to spend upwards of $500,000 so their KiwiSavers are not meeting the threshold and there's a $100,000 difference between house prices and the first home grant cap."
However, Hubbard said different factors had made buying a house harder in the past and people still bought.
"When you want a house, you want a house. When interest rates were 20 per cent, people were still buying houses.
"The factors in play at the moment are making it harder for some but people will just become more creative.
"It's important to be realistic that you're not going to necessarily get everything you want in your price range starting out. It's about just getting on the ladder in the first place."
Trade Me Property’s latest Rental Price Index is out.