It's not impossible to buy a first home. It's beyond hard, but young Kiwis still do it, sometimes without family support.
I've been brainstorming with a young person who is determined to buy his own home. My two rules are: 1. Always say: "I can", not "I can't" and 2. Think outside the box.
If you think "I can" you'll start looking for ways to make your dreams work. It will change how you approach planning, spending, saving and budgeting.
Some of the issue with buying your first home is the narratives in our society that "it's impossible to buy a house" or "it costs more than $1 million to buy the median house". Why would you be buying the median house in the country's most expensive city as a first home? Surely you'd buy at the cheaper end of the market not the middle. Retrain that brain.
Can you move to a cheaper location outside of Auckland? It's not going to kill you and you might even like a slower pace of life.
You'll find refugees from Auckland's house prices in small towns everywhere, and they find jobs. I searched jobs in Morrinsville this week and found 21 jobs on offer in a wide variety of industries. Sales and operations managers jobs, WOF technician, construction manager, field support, lab technician, motorcycle parts sales, insurance business development and more.
Plenty of people live in the small towns of the Waikato and commute to Hamilton. Or live in Huntly, Meremere or Pokeno, for example, but work in South Auckland.
Buying in the provinces comes with the Catch 22 that the KiwiSaver caps are lower. Wherever you choose to live you will need to buy at the bottom end of the market if you want to qualify for a First Home Grant.
KiwiSaver is your friend even if the system is somewhat stacked against many buyers. You will have both a cap on the property price you can buy, which is $600,000 in Auckland unless you're buying new and it's $650,000. There are also salary limits of $85,000 for a single person and $130,000 for a couple.
I searched online for Auckland property for sale and found plenty of properties within the KiwiSaver cap including some brand new standalone houses on the city fringes. If you're willing to start your journey up the property ladder in an apartment you have a lot of choice. I've heard many good reports about apartments built by Ockham Residential and when I looked on OneRoof.co.nz this week there was a rather nice brand new 40sq m apartment for sale in Avondale for $480,000.
Even if you can't get the First Home Grant, you can still withdraw your KiwiSaver savings to buy.
Seek help. As my colleague Sasha Borissenko pointed out in this very paper last week, a mortgage broker can help you over the hurdles you will face, and there will be many. For role models look for other people who have just bought their first home and learn from them.
The young person I've been helping had read The Barefoot Investor book before I became involved and I did have to reign in his expectations. Yet the desire to buy a house coupled with the "I can" has led to a promotion at work, learning to live with less, and looking for ways to ramp up savings: such as replacing a gym membership with home equipment.
Slumming it for a few years in a shared flat for cheaper rent, or even swallowing your pride to be a boomerang kid and live with your parents if you can is going to save money. The more you think "I can" the greater your ability to save will grow.
If you're using KiwiSaver, remember you need to live in the house for six months after you buy it or you won't qualify for KiwiSaver incentives.