New data shows just how long it can take to buy a home in Tauranga, one of NZ's least affordable housing markets. Photo / George Novak
New data shows just how long it can take to buy a home in Tauranga, one of NZ's least affordable housing markets. Photo / George Novak
Nearly 14 years.
That is how long it is taking first-home buyers in Tauranga to save enough for a deposit, new data reveals.
And once they secured a home, they were spending an average of 70 per cent on their mortgage repayments, making Tauranga one of the least affordable maincentres in New Zealand.
According to CoreLogic’s Housing Affordability Report, released this month, Tauranga’s average property value was $1,074,336, about 10 times the gross annual average household income of $104,504. The percentage of income now needed to service a mortgage was about 70 per cent, similar to what was needed to service a mortgage 15 years ago.
CoreLogic chief economist Kelvin Davidson. Photo / Peter Meecham
CoreLogic chief property economist Kelvin Davidson said Tauranga had generally seen housing affordability improve in the last few years, albeit from a stretched position.
Davidson said the value-to-income ratio had fallen from a peak of 11:9 in Q1 2022 to 10:3 in Q4 2022, with years to save a deposit also falling pretty significantly, from 15:9 in Q1 2022 to 13:7.
That was still above its own average (10:8) and the New Zealand figure (10:4).
Davidson said as mortgage rates climbed, the affordability measure covering payments as a percentage of incomes had not markedly improved yet in Tauranga or elsewhere.
“But as rates flatten off, this measure should also improve from here on.”
Tauranga’s demographics were important to note in relation to housing affordability, he said.
“A greater proportion of older people [with more wealth and investment income, but less wage income] amongst its population can sometimes make housing affordability look a little less favourable than it actually is.”
Classic Group’s managing director Matt Lagerberg. Photo / Salina Galvan Photography
The Classic Group’s managing director Matt Lagerberg said there had been an increase in inquiries from first-home buyers.
New homes in the Bay of Plenty were priced from $599,000, which was considered a comparably affordable option suited to first-home buyers, he said.
But accessing funding was by far their biggest challenge, preventing them from moving forward, he said.
“Understanding how lending works and what the banks are requiring, and why, is something we are working hard to educate first-home buyers on.”
It was working with each first-home buyer to try and find a way forward for them, he said.
“When it comes to getting a mortgage right now, the traditional approach does not work for everyone.
“In some cases we are considering flexible contract terms, helping friends work through the process of purchasing a home together, and we’re seeing siblings buy together. These kinds of solutions reflect their strong appetite to invest in property.”
The good news was banks were showing signs of softening, he said.
‘It isn’t easy but it is possible’
Steph George took five years and worked two jobs, sometimes working up to 70 hours a week, to save enough for her house deposit. Photo / Supplied
Steph George is living proof that a little sacrifice can go a long way when it comes to buying your first home.
The 27-year-old has built her first home with Classic Builders in Rotorua.
It took her five years and two jobs, working 70 hours a week, to save up enough money for a house deposit.
George is sharing her story as CoreLogic’s Housing Affordability Report reveals it was taking people in Rotorua nearly eight and a half years to save for a deposit on their first home. And once they secured a home, they were spending a “record” 43 per cent on their household income on servicing their mortgage.
A youth support worker, George also worked a second job at a local bar. She spent five years saving the 20 per cent deposit required, sometimes working 70 hours a week, and boarding at home with her parents.
But, she said, knowing it was a short-term solution to realising her dreams made it manageable.
“It hasn’t always been easy.”
George was set back a few times by the bank, pushed her KiwiSaver input to the highest contribution level “because if you don’t receive it, you don’t miss it”, paid rent to her parents, and kept her outgoings minimal.
“I saved $300 a week.
“I am semi-grateful to Covid just because I wasn’t missing out on going out. I am also very lucky to have been living with my parents at the time.”
In five years, George said she had managed to save between $70,000 and $90,000.
George said, as a young person, it could feel like saving for a house deposit was out of reach.
“It isn’t easy, but it is possible.”
She said being willing to take the short-term pain for the long-term gain can be the step ahead that secures a financial future.
“My mum and dad have always taught us to have goals, and I realised quite early on that it didn’t matter what car you drive or what material things you have if you don’t have a safe, warm house to put them.”
George said she began attending open homes before getting pre-approval from her bank to see what was available.
“It was scary.” That was because the houses she looked at were not only out of her budget, but also needed a lot of DIY work.
“At that stage, there wasn’t anything that I fell in love with.”
Then in November, the Ministry of Housing and Urban Development opened eight Ngāti Whakaue affordable houses for Ngāti Whakaue whānau on the Wharenui Rise development.
The single-level, three-bedroom, one-bathroom, homes were priced at $500,000.
The Wharenui Rise development is a commercial housing development on land owned by Ngāti Whakaue Tribal Lands in Ōwhata.
“I thought, this is what I have been waiting for,” George said. “You had to whakapapa back to the land, which was important to me ...
“So I went back to the bank to find out what I could do to get that ‘yes’.”
After gaining pre-approval, George was allocated one of the eight homes.
George said the home was one street over from where her dad grew up, about 100 metres from the school she went to and 1 kilometre from where her parents lived.
“This is why I worked all of those extra hours. This is what I wanted and it was all worth it.”
Her advice to others was to “keep going and explore all options”.
