House prices in Auckland have risen so fast that many single people on ordinary incomes now find it impossible to buy a first home on their own savings.
This week's AMP360 home affordability index shows a 25- to 29-year-old on a median income could not make the payments on an "affordable" Auckland home (three quarters of the way down the price scale), which now costs $673,400. The mortgage would cost $809.82 a week - more than his or her take-home pay of $786.33.
As a result, some would-be home owners are exploring other ways to buy a part share in a house, either through a partnership with a friend or some form of shared equity scheme, which would involve help from an employer, charity or government organisation.
One policewoman in her mid-30s, who earns about $63,000 a year and has saved a deposit of $50,000, says she has had to move back in with her parents on the North Shore to try to save enough to buy her own home.
"It's awesome that I can do that," says Sally (real name withheld at her request). "But I don't want it to go on forever. I've been there two years.
"I could afford a $300,000 house, paying the mortgage myself. But I can't afford $600,000, which is all you can get in Auckland. My thing is trying to find someone to go in with me. I've talked to a couple of friends.
"It's a big step finding someone to buy a home with. You need someone you can trust."
She has also considered buying in another city and renting it out to build up her capital, so she can buy later in Auckland.
"That doesn't get me out of home but at least I'm in the property market, which is hopefully going to increase that equity."
That approach came up during the Herald's Home Truths series as our expert panel - independent economist Shamubeel Eaqub, Quotable Value NZ national spokeswoman Andrea Rush and Home Owners and Buyers Association president John Gray - considered the financial dilemma faced by Cecile Bourgeois, a 39-year-old French teacher earning $74,000 a year and struggling to find a place for $500,000.
"At the moment I'm not bothered with the loan," Cecile told the Herald. "I know having talked to [the banks] that I can get something that enables me to buy a house and I can actually make the payments every week.
"It's just a problem of finding a place to buy and I can't afford to get something that is more expensive than $500,000. I can't. And I can't just live on pasta and potatoes."
The panel believed she probably needed to look outside Auckland, unless she was prepared to take in flatmates or buy in partnership.
"She could find a friend or a colleague and they might be able to pool their resources," said Mr Gray. "But those sort of relationships have to be very carefully mapped out with a proper legal agreement before they enter into a joint purchase."
One of New Zealand's most influential housing developers thinks it's time to consider new business-driven models of home ownership for first home buyers, so workers can afford to buy in Auckland.
Steve Evans, chief operating officer housing of Fletcher Building, which is one of the country's largest new-home building suppliers, planners and developers, is an advocate of shared ownership models, with entities such banks, pension funds and perhaps the Government pitching in.
His idea is new here - but he's seen it work first-hand in London, where key worker housing schemes offer new homes to rent at 80 per cent or less of the typical market value and they are generally in high demand. He wants something like that in Auckland, saying it could help resolve problems.
"It would mean more people could afford their own home earlier than they would traditionally have."
His proposal is for a 60/40 ownership split between a business or other lender and the struggling first-home owner. That could mean a $750,000 Auckland house would only require about $450,000 from the first-time buyer, demanding deposits as low as $20,000 to $50,000.
Over perhaps a decade, the first-home buyer would buy the other party out and gain 100 per cent ownership.
But it would require co-operation from financial institutions, businesses and probably central and local government to get the nod, Mr Evans acknowledges.
"The over-riding view is that it sounds good but the details are complicated. If there is a default on the mortgage, who has the first call?"
Banks must also abide by Reserve Bank lending restrictions which might not be able to be complied with under shared ownership models.
Auckland already has an example of this kind of organisation, backed by charities and central and local Government. The Housing Foundation is a not-for-profit charitable trust developing new, affordable homes for low income families and is the most advanced of any developer in Auckland's Special Housing Areas. It is now building at the coastal Auckland Waimahia Inlet on the Manukau Harbour and late last year celebrated completion of the 100th house there. Houses are also rising at Hornby in Christchurch.
Buyers must have a household income of $55,000 to $95,000, not own a house and have at least one house member in full-time work.
Eligible households buy a share of an available home at a level they can afford and the foundation pays for the rest.
The household can buy out the foundation over time or sell back their share to the foundation or on the open market.
Those without a deposit can rent to buy for the first five years, while they get help to pay off their debts.
High bar for entry level
What's the cut-off point for being able to afford a home in Auckland? Mortgage brokers reckon you will struggle to find anything cheaper than $350,000 or make the payments on an income below $70,000 - and both those figures are probably a stretch.
John Bolton, chief executive and founder of Squirrel Home Loans which arranges about $1 billion of mortgages annually, describes a place selling for only $350,000, bought on an annual income of $70,000 to $80,000 and the skinniest possible deposit of just 10 per cent equating to $35,000.
A one-bedroom unit on a cross-lease site in perhaps Papakura or Manurewa is about all that would buy, he says, or perhaps a "shoebox" apartment in the CBD - although that would come with much tougher lending restrictions. CoreLogic data confirms you would indeed need to be a lucky buyer to get in at this level. Only 5 per cent of all properties in Auckland are priced within $350,000. Only 7.5 per cent are at $400,000, 11 per cent at $450,000 and 17 per cent at $500,000.
Apa Fatialofa, founding director of Mortgage Care, says people at the lower end of the market really struggle. Rising prices mean a $350,000 scenario is now highly unlikely.
"In October last year, I arranged a 90 per cent pre-approval Welcome Home Loan for my clients to buy their first home for $410,000. They had 10 per cent deposit of $41,000 and combined income of approximately $70,000. They were looking for a two-bedroom unit. They are still looking."
Peter Milne who works with Fatialofa at Mortgage Care, says income really sets the bar.
"Most need in excess of $80,000 incomes to start with. I did a pre-approval in July for a couple to purchase up to $450,000 but they had a 20 per cent deposit, so [that meant] a mortgage approved of $360,000 on joint incomes of $79,000. They are still on the lookout."
Bolton says he has seen people get into the Auckland property market with these types of extremely low amounts.
"That's workable providing they don't have consumer finance debt, which includes credit card debt, store cards, hire purchase, car loans."
He is somewhat disenchanted about people's inability to scrimp and save.
"You've got to be disciplined. You don't need the $17,000 car. There's nothing wrong with a $3000 car."