Whanganui has had one of the hottest housing markets in the country in recent years with median prices rising from $350,000 in June 2020 to $459,000 last month.
It's made it tougher for first-home buyers looking to get into the market - but not impossible.
Jacob McSweeny investigates.
There is hope for first-home buyers in Whanganui.
Real estate agents, mortgage advisers, lawyers and market watchers all say they have noticed a shift in the last few months as investors backed away from the city.
First-home buyers are stepping into the void and have offers, often with conditions, accepted.
So what is required for people who are renting now to get into a home they can call their own in Whanganui?
The money
Whanganui mortgage adviser Aaron Stampa said the first thing prospective buyers needed to do was find out how much they can borrow from the bank.
"Without knowing how much money you can borrow you can't really go shopping."
To find out how much a buyer can borrow they need to see a mortgage adviser or go directly to their bank.
The buyer's income, deposit and debts are crunched to get an amount they could feasibly borrow to buy a house.
In Whanganui it is still possible, although many in the real estate game will say it is not easy, to buy a house for $400,000 or less.
This week OneRoof revealed Whanganui's median house price sat at $454,000 this month.
Buyers will probably need a minimum deposit of $40,000 or 10 per cent of the total price of the house.
Banks prefer a 20 per cent deposit, but half of that can be enough, Stampa said.
• Read more: First-home buyers in Whanganui filling an investor void
When a deposit dropped below 20 per cent - the situation many first-home buyers are in - the question was whether the borrower could afford the higher repayments.
"The servicing has to meet guidelines," Stampa said. "I wouldn't say you have to be on a high income."
Each bank will have its own guidelines but they typically assess a figure known as uncommitted monthly income (UMI) to find out a person's ability to service a mortgage that is above 80 per cent of the value of the house.
For example if a buyer had a 10 per cent deposit a bank may require that borrower to have a UMI of $1000, Stampa said.
Most first-home buyers will use their Kiwisaver accounts as their deposit - $1000 has to be left in the account when funds are removed.
Along with that, buyers can get up to $5000 for a single person, or $10,000 for a couple from the Kāinga Ora First Home Grant.
Those figures double for new builds.
But the couple have to be earning less than a combined $150,000 and in Whanganui the house has to sell for no more than $400,000. For a new build that figure is $500,000.
Many people across the real estate scene in Whanganui say that figure should have increased when the Government announced new housing policies in March.
"The bank of mum and dad" can be an option for some and Stampa said he was seeing a lot of buyers come in with a hefty gift to add to their deposit.
House buying dream within reach for most
"A young couple on minimum wage, that's $83,000 a year income if they work full time," Stampa said.
"If they've both been on Kiwisaver for more than three years, they will have a 10 per cent deposit. They can get a mortgage."
What often stopped buyers was how they spent their money, Stampa said, and debt was a major hurdle for a lot of first-home buyers.
"There can't be any defaults, certainly no bankruptcy, can't be any arrears," Stampa said of people with a deposit less than 20 per cent.
And the market was unforgiving for people who had skeletons in the closet when it came to their credit record, he said.
"There's 10 other applications in the queue they don't have to take a punt on."
Prospective buyers should also be aware banks would scrutinise their week-to-week budget.
One first-home buyer Stampa helped into a property was spending $1800 a month on lunch and takeaway dinners.
"I just said to him 'dude you need to sit down and really re-do your budget and start making your lunch'.''
That client eventually did get a mortgage after the bank asked him to clean up his spending.
Another classic pitfall for first-home buyers was taking out finance on a new vehicle: "Getting their first job, going out and buying a brand new $50,000, 1 per cent finance vehicle that they're paying off for the next five years".
Often they see it as $200 a week they can afford, Stampa said.
"You can afford $200 a week. But you can't afford $200 a week on your vehicle, plus $200 a week on your mortgage, plus rates, plus insurance."
If a prospective buyer had already taken out that car loan, he suggested trying to settle it as soon as possible.
After an initial meeting with a mortgage adviser, the buyer could then look at getting a pre-approval from a bank.
This would give them their figure to then start going out and putting offers on houses.
The house
Although they are available for the lowest prices, a house that needs a lot of immediate and major repairs is normally not going to be a viable option for first-home buyers.
Stampa said banks would not lend for a house that needed major repairs.
Property Brokers' real estate agent Vicky Todd said there was a tight window for first-home buyers to work in.
They should not expect to get the types of houses their parents might be living in, she said.
"A good solid, structurally sound home that they can add a coat of paint and get the garden sorted."
Two-bedroom houses were getting more traction with first-home buyers, after often being snubbed for three-bedroom options.
Bayleys' agent Lyn Wickham warned that although prices were not too bad for first-home buyers (between $400,000 and $500,000), there was not enough stock.
She believed there was a lack of options, specifically low maintenance and smaller homes for older people to move out of their family houses to.
Todd reiterated it was a sellers' market.
"We've come from a marketplace where we had over 1000 houses (circa 2014) on the market for all of Whanganui.
"We're now at 126 [listings] as at [Wednesday] morning."
And because of its relatively low prices, Whanganui had caught the attention of first-home buyers all around the country and many people were leaving places like Auckland and Wellington for the river city, Todd said.
"There's a lot of people moving here so our first-home buyers are competing with them as well."
What is a house worth?
"We never know where a house is going to sell,'' Todd said.
"We are being baffled by some of the results. Our jaws are being left on the ground a lot of the time where we're not expecting results," Todd said.
One of the issues for first-home buyers was figuring out what to offer on a house.
One said she knew one house where the vendors wanted $395,000 and ended up getting $512,000.
Todd and her business partner Tess Hunt recommended talking with the agent selling the house who could give an interested first-home buyer comparisons to similar houses and say what they sold for.
That would then give the buyer an idea as to whether that house was worth pursuing.
Todd said buyers writing to the vendor explaining who they were and why they wanted to buy the house could be a good move.
"We had an owner accept an offer $55,000 less than two other offers and conditional because it was a first-home buyer that wrote a beautiful letter with it.
"It was really neat to see, they wanted it to go to a first-home buyer."
The lawyer
Whanganui lawyer Rob Moore often helps first-home buyers with their offers.
He suggested contacting a lawyer or legal executive before offering on a house.
"Find out first of all if they're going to be 'fixed fee' because that's really important," Moore said, pointing out that others may charge by time.
Typically a buyer should be paying between $1500 and $2000 to have their offers looked over by a lawyer.
Moore said when he's going over a first-home buyer's offer he checks if they are going to need a builder's report and that they understand the terms of their agreement.
Then it is time to "smack an offer in" that usually includes a builders' report and a finance condition, Moore said.
The first-home buyer experience
Madison Sharp and Sam Willis are renters who work full time and now want to own their home.
They are renting a house owned by Willis' nana and have been house hunting for two months.
They want a two- to three-bedroom house with a large garage.
"It's something we've always dreamed about - owning our own home.
"Just having something that's ours that we can do what we want to and have room to grow into, things like that."
The couple missed out on two houses they have offered on but Sharp said she was confident it would not be long before they get their house.
At first Sharp said she felt overwhelmed after conversations with friends and families made it sound like buying a house in their price range would be impossible.
"After looking and after actually placing a couple of offers on houses, which we did miss out on, we didn't feel too disheartened because we were told we were the second highest offer a couple of times.
"Which was awesome to hear because it made us feel we're not too far off being able to get the houses we want."
Other properties they have gone to see have had no or just one offer on them, making the couple feel more confident.
It's not out of reach
First-home buyers getting offers accepted was good news for Whanganui as a whole, Stampa said.
"That will give first-home buyers, those young tradies, those people that have just left university, doing their first year of teaching or whatever it may be, it will give them hope to think it's not out of reach.
"Talk to the right people and work out a plan.''