Auckland CityIt’s no secret that Auckland’s house prices are at record highs – with recent REINZ figures estimating the median sale price for October being a whopping $582,000 – 25% higher than two years ago compared to a national increase of just 13.3%.
As such, when you decide to enter the mortgage market in Auckland, you have to be canny about it, and we have 3 key bits of knowledge we believe every potential homeowner should know to help get them out of a rental and into a new home!
1. Know Your Budget!
Being aware of your financial limitations is important, and particularly so in a pricy market such as Auckland. This will ensure that you resist the temptation of straining your finances just that bit to far in the search for the ‘ideal’ home as in reality, the most ‘ideal’ home is the one that you can afford!
Furthermore, If you haven’t contacted your bank or mortgage broker since the LVR limits came into effect, do so immediately! In many (if not all cases) banks have cancelled pre-approvals or changed the amount they are willing to lend. As such, the financial situation you were in a month or so ago, may not be that which you will be experiencing from now onward.
2. Know your suburbs!
We cannot emphasise this enough! Auckland, like all cities has its ‘elite’ areas- where you can expect to pay more simply because of the properties postcode.
This has been reiterated in a recent Westpac report, where it was noted that Ponsonby – Auckland’s most searched suburb online – was 22% more expensive on average than neighboring Grey Lynn. This means that should you opt to purchase a Grey Lynn property you will likely own it freehold a whopping eight years earlier than if you bought its equivalent in Ponsonby!
Look carefully, and beyond arbitrary suburb names – after all a few minutes in another direction may save you literally thousands of dollars, and allow you to retire that bit earlier!
3. Know Your Priorities!
Evaluate your priorities, and be prepared to sacrifice. While some of the outer suburbs may be further in terms of your daily commute, it can be worth looking at them from a financial standpoint, as they tend to be much more affordable.
Particularly in the current state of the property market, there is a shortage of affordable quality homes in central areas, so compromises are having to be made. In particular, more and more homeowners are having to consider that whilst the property they are able to afford now may now be their ideal home, it puts their foot in door into a market that is increasingly becoming more difficult to access, which will hopefully allow them to purchase something better in the future.
Furthermore, a willingness to be flexible is important for those who prioritise buying a house now, but are caught up by the LVR limits. With the full range of LVR avoidance options only now being discovered, those who may have initially seemed shut out by the LVR policies may find themselves able to take a slightly more circuitous route to owning their home- using a second tier lender.
With new options becoming available all the time (Including BNZ’s new credit card option announced this week) it is definitely worth consulting a broker to find the best option for your needs!
Finding a home in Auckland at the moment isn’t mission impossible, but by understanding what you want, where you can afford, and what compromises you are willing to make, you will put yourself in a prime position for purchase.
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