$950 a week for 30 years: First-home buyers face crushing mortgages

Auckland's first-home buyers will need to fork out up to $950 per week in loan repayments for the next 30 years based on what they're paying to get a foothold in the market.

That's according to figures by analysts CoreLogic showing there were 8350 first-time buyers in the Super City last year - accounting for one-in-four purchases across Auckland.

CoreLogic's figures also show these first home-buyers are now paying an average of $856,467 for their properties.

Community groups say the low number of buyers and daunting prices show only elites can afford to buy property now in our biggest city.

Auckland first home buyers snapped up one in four homes sold last year but overall house sales are down. Photo / Jason Oxenham.

Loan Market mortgage adviser Bruce Patten said buyers would need to have saved a minimum 10 per cent deposit of $85,600 and have a combined income of around $150,000 per year to be granted the $770,000 home loan needed to buy a standard entry level home in Auckland.

This would mean $850 weekly repayments over 30 years on current record low interest rates of 3.99 per cent or $950 per week repayments on 5 per cent rates.

Claire Szabo, the chief executive of non profit Habitat for Humanity, said the prices were out of reach for all but the top earning households.

Those with extra costs because they had children, a sick family member or elderly parent were all missing out.

"Where are all those children, those other people being housed – they are clearly not getting into first homes," she said.

The figures come as Auckland's median salary sits at $53,872 and community groups warn there could be as many as 90,000 city families unable to even afford a KiwiBuild home at a maximum price of $650,000.

OneRoof editor Owen Vaughan said: "Affordability in Auckland has been challenged by the successive years of price rises. Although the market has softened in the last 12 months, entry points to the market have shrunk - you can count the number of suburbs with median values of less than $500,000 on one hand."

The figures come as the Government considers introducing a capital gains tax in what could be its latest move to reform the housing market.

Its Tax Working Group publically releases its final report today and is likely to recommend the CGT be introduced, with some pundits saying it could help first-home buyers by driving investors out of the market.

Real Estate Institute of NZ chief executive Bindi Norwell said many investors would "just call it quits" and sell their rental properties if hit by the tax.

Landlords had already faced a long list of changes over the last 12-18 months, including being unable to claim losses on rental properties as tax breaks and added costs from ensuring the homes are insulated and more healthy to live in, she said.

Auckland first-home buyers are finding it tough to get a foot on the property ladder. Photo / Richard Robinson

CoreLogic senior property economist Kelvin Davidson said there was a lot of water to pass under the bridge before any CGT was introduced, with the Government first having to accept it and then survive the next election.

But if introduced, he expected it to result in fewer house sales as some home owners kept hold of family properties and passed them to the next generation to avoid paying the tax.

While other economists had tipped the tax could reduce prices by up to 10 per cent, Davidson said it was too early to predict.

While Auckland house prices were yet to fall significantly after their decade long growth, the number of sales had slowed considerably.

This was mostly led by a drop in new purchases by existing homeowners, who were no longer upsizing, Davidson said.

"Perhaps, they are already maxed-out on debt, while we are also seeing renovation consents being strong," he said.

"So it looks like people were renovating rather than moving."

Investors and first-home buyers by contrast had crept back into the market last year.

First-home buyers were helped by their ability to use their KiwiSaver savings as deposits, while investors were coming back after initially dropping out of the market in large numbers in 2016 when new rules required them to have a 40 per cent deposit for loans.

Habitat for Humanity's Szabo said market forces alone were not producing affordable homes.

"Everyone is watching the Government as it tries to turn things around for people," she said.

"Obviously there is a lot of criticism [about the KiwiBuild programme] and it is a tough space, but irrespective of that we take the view that ... a significant Government programme in home ownership is desperately needed."