The Herald is following three sets of house hunters struggling to buy a first home in Auckland. We take their circumstances to a panel of property experts; independent economist Shamubeel Eaqub, Quotable Value NZ national spokeswoman Andrea Rush and Home Owners and Buyers Association of New Zealand president John Gray. Today we catch up with our final couple and find out what the experts think they should do.

Like many new Aucklanders, Bharat Bhushan and Lovely Garg are not emotionally attached to the traditional Kiwi section.

The newly married couple, who will soon be joined in New Zealand by Bharat's mother, brother and sister from India, want a two- or three- bedroom home to accommodate his family and have their own children in the next few years.

They are exploring new terraced housing developments in Sunnyvale and Takanini in the $600,000 to $650,000 price bracket, with a view to selling and buying again within two or three years.

Taking on a mortgage up to $600,000 doesn't concern them, although it would be close to 60 per cent of their regular income.


They are also happy about high-density living for themselves but want to know how New Zealanders feel, so they can be sure they are buying a place with good resale value.

The experts' verdict

Our experts worry that Bharat and Lovely are stretching themselves financially.

"I think it's going to be a challenge overall because they only have a 10 per cent deposit," says John. "So with the new loan-to-value restrictions [which require banks to get a 20 per cent deposit for most home lending] there may be challenges in obtaining a mortgage. There could also be challenges from an income perspective."

Says Shamubeel: "At least in the short term, they're going to have to think very seriously about their cash flows. I think $600,000 would be a very big mortgage for this couple - unless Lovely got a high-paid and more secure job, but they want to have a family."

Bharat and Lovely's response

Bharat says they have thought carefully about paying half or more of his salary on their mortgage.

"We were a bit nervous at the start, then you know ... we can't do anything because we can't get a house for less than that."

He says the family are about to pay $620 a week in rent anyway, when they move to a three-bedroom rental in Blockhouse Bay. They will pay more to buy but at least they get an asset for their money

"I don't mind paying $300 extra a month if I'm paying for my own house."

They are considering buying a rental at first, as they can only afford to buy in suburbs they don't want to live in. But as investors they might not be able to borrow or use KiwiSaver money on the more generous terms available to first-home buyers.