First-time buyers find that owning adds up

By REBECCA WALSH

When Daniel Hardcastle read that houses in parts of Auckland were rising in price by nearly $500 a day, he decided it was time to buy.

"I finished reading the article on Saturday morning. We saw the house Saturday afternoon and we put an offer in on Monday."

It was the second house he and his wife, Nerissa, saw that day. A week and a half later, the deal was finalised. They move in on January 17.

The couple, in their early 30s, leave a one-bedroom central city apartment for a $300,000, three-bedroom, brick and tile home in Ellerslie.

Like many first-home buyers, they decided paying off a mortgage was preferable to paying $350 a week rent. It was also more practical for the family they plan.

"When you are starting a family your priorities change. You want a garden and to be able to have a barbecue," said Mr Hardcastle.

Although figures are not kept specifically on first-home buyers, anecdotal evidence suggests they are getting older and borrowing more.

Banks and property experts say a booming property market and the fact that people marry and have children later are behind the trend.

Cynthia Brophy, general manager of corporate affairs at the National Bank, estimated that about 10 per cent of home loan customers were first-home buyers. Last year about 21 per cent were under 34, compared with 32 per cent in 1996.

At Westpac, first-home buyers made up 15 to 20 per cent of those borrowing, said David Tyrer, product manager for home loans. Most were aged 30 to 35, compared with 25 to 30 a decade ago.

Real Estate Institute vice-president Howard Morley said rising rents, low mortgage rates and a buoyant property market were creating opportunities for first-home buyers in Auckland.

He said there was an increasing demand for property at the bottom end of the market among first-home buyers, but with banks prepared to offer loans of up to 95 per cent, some were buying well above the average starting point of $220,000 to $250,000.

Mr Hardcastle, who is food and beverage manager of The Heritage, said that with a good joint income the bank was willing to loan up to $500,000 but, wary of over-extending themselves, they chose to put a 10 per cent deposit on a $300,000 home farther from the central city. The interest repayments would equal what they paid in rent.

But for some Aucklanders the property market is simply too hot to handle.

Latest Census figures show 67.8 per cent of people owned their homes in 2001, compared with 73.8 per cent in 1991.

Professor Bob Hargreaves, of Massey University, surveyed 350 people renting in cities around the country this year and found that about 70 per cent had not bought for financial reasons.

"They wanted to and had aspirations, but just couldn't afford to."