Is your first home in your stocking this Christmas?

Young couple, first home buyers

The first official days of summer are now upon us, and everyone is looking forward to Christmas and the start of a new year. However, while we're wrapping the presents and setting up the tree, first-home buyers could be scouring Auckland for an affordable place to call their own - and they might have a good chance of finding one, according to new industry figures.

The sellers' market is softening

The pre-Christmas season is often seen in property circles as dead air. People are focusing more on the upcoming holidays than looking to buy or sell a home. But it appears that this Christmas is a particularly special one for Auckland house-hunters, as realestate.co.nz figures have revealed an even more significant cooling than expected over the last few months.

"Auckland was the only region across the country where demand is down on the same period last year," said realestate.co.nz CEO Brendon Skipper, referring to the 8.1 per cent drop in views per listing compared to September - November 2015.

As a result of this dropping demand, those homeowners who are looking to sell will find that even the hot properties of Auckland will be sitting on the market for longer than they might like: where sellers are getting desperate, buyers could be finding themselves with a bit more power at the negotiation table.

Prices remain high

Before first-home buyers go popping moderately priced sparkling white wine and readying themselves for a renewed Christmas house-hunt, that extra power at the negotiation table hasn't quite overcome the primary hurdle in getting on the property ladder. We're talking, of course, about Auckland house prices, which continue to be deemed as unaffordable for first-home buyers in interest.co.nz's Home Loan Affordability Report.

The latest release for October 2016 shows that a pair of first-home buyers earning the median income and buying a lower quartile home would be sinking close to half their combined income into mortgage repayments. Considering that any mortgage costing over 40 per cent of combined income is deemed unaffordable, this is a significant barrier, even in a softening market.

Kiwi ingenuity

This is nothing new, of course. This has been the scenario for first-home buyers since at least 2014, according to interest.co.nz figures. As a result, people are coming up with a whole variety of ways to get around the property price gap. 

Some are purchasing investment properties in the regions where it's more affordable, using this income to subsidise their own rent in the city and getting their share of the capital gains. Others are using family guarantees and government-backed loans to help boost their deposit or remove the additional cost of lenders' mortgage insurance.

Those are just a few of the options for first-home buyers. Nobody is saying it's not a tough market in Auckland, but that just makes it all the more satisfying when you figure out a way to work around those problems. 

How can you overcome those hurdles?

Here's where Squirrel comes in. Our mortgage advisers know the home loan environment like the back of their hands, in the central city or the surrounding regions. If you're a first-home buyer and don't know where to start getting a mortgage, come and talk to us. If you are a young investor who needs help understanding the new loan-to-value restrictions, we've got you covered. 

Do yourself a favour this Christmas - put a home at the top of your wishlist and start by figuring out how much you can borrow. It's still a seller's market, but arm yourself with the right knowledge and you'll quickly find you've evened the playing field. Start by getting in touch with Squirrel today.