Home buyer joy: Cheaper to buy than rent in nearly 200 NZ suburbs

Kimberley Carl and Steve Robertson bought their first home earlier this year, moving in on June 1. Photo / Supplied

First home buyers rejoice — it's now cheaper to buy than rent in nearly 200 towns and suburbs across New Zealand.

That includes Auckland Central, where a typical month's mortgage repayments are $670 less than rent for the same period, new data from analysts OneRoof-Valocity shows.

With record low interest rates likely to drop even further on the back of the shock cutting of the official cash rate to 1 per cent, the deal for first home buyers could get even better.

It's led mortgage advisers to call on aspiring homeowners to start crunching the numbers and consider giving up renting for good.

Other standout areas include Invercargill, Rotorua and Whanganui. In parts of the latter first home buyers can save up to $1000 a month by paying off a home loan rather than renting, the data shows.

OneRoof editor Owen Vaughan said the new figures would likely shock those seeking to get on the property ladder.

"What will surprise many is that even in a place like Auckland, there is an area where buying is a cheaper option than renting."

The findings come with Auckland property prices on the slide, with the city's median price slumping to $825,000 in July — down 3.7 per cent on the same month last year.

House prices have now fallen every month this year compared with the same period in 2018, and have risen only once in the past 17 months.

That's seen first home buyers become the most active buyer group in Auckland, securing 27.4 per cent of all new home loans last month.

Record low interest rates and the Reserve Bank's decision to further cut the official cash rate this week were also helping, Century 21 real estate branch owner Derryn Mayne said.

"Potential first-home buyers need to head to a mortgage calculator," she said.

"Once we see how much retail banks are going to pass on, those currently renting might be pleasantly surprised."

Loan Market director and mortgage adviser Bruce Patten said his phones went "ballistic" with aspiring homeowners after the cash rate cut.

"We're saying now's the best time ... if you've got a job, and it's stable and if you can get into a property, jump all over it," he said.

But the picture is not all rosy. After a near decade of skyrocketing prices, Auckland's first home buyers must first raise huge deposits before banks are willing to give them home loans.

Auckland Central was the only part of the city where monthly mortgage payments were cheaper than a month's rent payments, and that's an area dominated by apartments.

If you've got a stable income, now could be the time to buy says a mortgage broker. Photo / File

In more exclusive suburbs such as Epsom, Herne Bay, Parnell, St Marys Bay and Takapuna, monthly home loan repayments actually cost $4000 more than tenants pay in rent.

So how did OneRoof-Valocity reach its conclusions?

It worked out the median sales price and median rental price in the first week of July for 900 suburbs, excluding those where fewer than 30 homes sold or which had fewer than 20 rentals.

They then deducted the cost of a 20 per cent deposit from each suburb's median sale price — the typical amount needed to land a mortgage — and assumed a 5 per cent interest rate across 30 years to work out home loan repayments.

It meant Auckland Central home buyers would be left with $2233 in monthly repayments after raising a $104,000 deposit and taking out a $416,000 home loan.

This compared to a month's rent in the area typically costing $2904.

The calculations do not factor in additional costs such as rates and insurance.

Buyers in Herne Bay, in contrast, would need to raise a $513,000 deposit and make an eye-watering $11,015 in repayments each month on their $2.05m home loan.

Renters would pay a comparatively cheap $5564 to live in the suburb.

Elsewhere, monthly home loan repayments were cheaper than rents in every part of Whanganui, with buyers in the suburb of Otamatea saving $1040 a month compared to typical renters.

Invercargill was the next best first home buyer hotspot with repayments cheaper than rents in 23 of 26 suburbs. They were also cheaper in 22 of Rotorua's 33 suburbs.

Overall, it was cheaper to own than rent in 187 suburbs nationwide.

In another 94 suburbs, rents were only marginally more expensive than home loan repayments, within $100 per month.

However, home loan repayments were more expensive than rents in every part of Hamilton, Queenstown and Wellington.

In Auckland, home loan payments were at least $1000 more than rents in about 160 suburbs.

Better off buying than renting

Ever-increasing rent prices tipped one Auckland couple over the edge and into the property market.

Kimberley Carl and Steve Robertson bought their first home in Te Kauwhata, south of Auckland near Hampton Downs, earlier this year.

Kimberley Carl and Steve Robertson bought their first home earlier this year, moving in on June 1. Photo / Supplied

Carl told the Herald it was Christmas when they were checking how much they were paying in rent before the decision was eventually made to buy.

"We were looking at how the prices of rent were just going up and up and up and so we thought we might as well buy a house. It made us think, 'What's the point in paying rent when our mortgage is going to be [about] the same'," she said.

Mayne said the couple approached the firm earlier in the year with the plan of buying.

The real estate agency put them on to a mortgage broker who advised them there were still a few things to fall into place before they could buy.

However, the couple were able to buy the $415,000 Te Kauwhata property using a $40,000 deposit and moved in on June 1.

"We were quite lucky because we had KiwiSaver, that's the only way we could have done it," Carl said.

In addition to buying their own home together, Carl gave birth to a son, Lewis Graham Robertson, three weeks ago.

Before moving into their new home, Carl 27, and Robertson, 29, were paying $450 a week in rent while living in Kingseat.

Nowadays, their mortgage is a little more expensive at $540 a week.

Carl said the couple was stoked to have bought their first home and said the quarter-acre property built in the 1960s had loads of potential.

She advised other renters hoping to purchase their own home to seek help from mortgage brokers or real estate agents.