Young, aspiring Auckland first-home buyers are not saving enough, says a real estate agency boss, encouraging them to lower their expectations and spend less.
Peter Thompson, the head of Barfoot & Thompson who appears in a Herald Meet the CEO video today, said a new generation of complaining high spenders criticised what they saw as exorbitant prices.
But they needed to change their mindset because their suburb choice, size of the house and its amenities were often totally unrealistic.
"They still want to go out on a Friday and Saturday night and have a good life as well as most probably have Sky TV. You know, sometimes you've just got to forgo something if you really want to progress," Thompson said.
"The young people of today want to live where they finished living with their parents."
They had to lower their expectations "and maybe they've got to go out one or two suburbs to slightly cheaper areas," he said. "There's still good buying if you're looking around that $500,000, and people say there's no houses for $500,000.
"There's plenty of sales being made in Auckland under $500,000 but areas like Glendene, Glen Eden, New Lynn out west, out south you're got Papatoetoe, Manurewa, Manukau Heights and then North Shore it's slightly higher [priced] but areas like Hillcrest or in the middle of the North Shore, really good buys for first home buyers."
But Sudhvir Singh, director of Generation Zero, supported by more than 10,000 young New Zealanders, said young people were not spendthrifts but high house prices and lack of choice kept them off the ladder.
"It's not true, in terms of wanting more lavish amenities," Singh said.
"If you look at the cost of a house in relation to incomes, it's gone up suddenly in the past two years," he said.
"It's only natural to hope to be able to afford a property in the neighbourhood you grew up in. There's a lack of suitable choices. If there were more smaller properties, young people would be able to afford them."
Thompson encouraged buyers not to over-spend.
"Interest rates are going to go up at some stage. I remember when I first bought my property in the 1980s, I was paying 24-25 per cent interest. Don't over-commit, especially young people. There'll be say a young couple, the girlfriend may fall pregnant or one lose a job. They go from a two-income all of a sudden down to a one-income and that can put a strain on any relationship."
Thompson said house size expectations were often unrealistic.
"Instead of a five-bedroom house, maybe it's only a three-bedroom house.
"We'd all love to have four-bedroom homes with ensuites, games rooms, etc but for your first home you can't always literally have what you want," he said.
Thompson, a third-generation family member of the agency, which sells one in three Auckland houses, has been with the company for three decades after starting in the Otahuhu office.
He also expressed qualms about the effects of fast-rising prices.
"There is a big price difference between Auckland and the rest of the country and it is getting out of kilter," he said.
"The biggest issue we have here in Auckland is just limited supply of property and once some new buildings are built and come onto the market, that will give people more opportunity to look around and not rush into decisions to buy.
"At the moment, there's a limited supply. If they don't buy quickly, they don't buy at all. There's not enough property for them to have a choice from.
"Vendors have to buy something and if they sell today, there's a risk they won't have something to move into so there is a catch-22."