A free-standing, three-bedroom house for less than $50,000. It might sound a fantasy to Auckland first-home buyers but a trawl through real estate listings reveals that if buyers broaden their search to areas in the central North Island, they can find cheap properties, with big sections and mortgage repayments of only about $100 a fortnight.
One of the cheap property hot-spots is Wairoa, in Hawkes Bay. A three-bedroom home on 682sq m is listed for $45,000. With a $2250 deposit, that results in mortgage payments of about $113 a fortnight.
Nearby, a one-bedroom, early 20th century cottage on more than 1000sq m is also listed at $45,000.
That is less than 10 per cent of the Auckland average price of about $520,000. The New Zealand median house price for April was $365,000.
Real estate agent Martin van Dooren said there had been a bit of interest in the one-bedroom property, which has been on the market since December, but said it required renovation.
For mortgage payments of less than $100 a fortnight, a two-bedroom unit is for sale in Tokoroa for $39,000 and a three-bedroom home in Murupara, on 825sq m of land, for $40,000. The Murupara property, listed in August last year, claims to return $110 a week in rent - bringing it into positive return territory compared to mortgage payments of $50.
Mortgage broker John Bolton, of Squirrel, said the properties would be no harder to get a loan on than any other. "Finance is not a problem provided they have a stable job or decent deposit and reasonable benefit income. Government income is more reliable."
Wairoa's main employer is Affco, which has been locked in a public dispute. Most of the work in Murupara is in forestry.
NZ Property Investors Federation president Andrew King said that was something people eyeing properties for investment needed to consider.
"Is the area dying? If the local economy is going down and there are no jobs available, the population could be dropping.
"If this is happening then the value of the property could still be going down. Small towns may be primarily relying on a single main industry or employer in the area."
Bolton said a 20 per cent deposit would usually be required. Kiwibank spokesman Bruce Thompson agreed: "We would consider any application on a case-by-case basis and have no specific concerns about the properties listed, although we may seek further information on the quality of the structures and on the market valuations."
Houses such as these may qualify for no-deposit loans in the Welcome Home Loan scheme, which was cut in the Budget. What buyers must watch for is that though the properties were cheap, the costs of owning them were the same as those of dearer houses.
Van Dooren said the rates on the one-bedroom cottage were $1190.29-a-year. The three-bedroom Wairoa home had rates of $1881.20.
Philip Macalister, publisher of NZ Property Investor, said the costs of maintenance would also be the same. "If you have two houses the same size and one is worth $50,000 and the other $350,000, it will still cost the same to put a roof on."
He said many would need money spent on things such as insulation.