KEY POINTS:
Generation X and Y are shunning Auckland's cheaper suburbs and taking on crippling debt to gain homes in the "right" location.
Property experts say many of today's would-be first home buyers are not prepared to claw their way up the property ladder over decades like their parents and grandparents did and are turning up their noses at poor-cousin suburbs, choosing to mortgage themselves to the hilt - or even face a lifetime of renting - to live in hip, blue-ribbon areas.
"They don't want to wait for anything," Bayleys Remuera real estate agent Geraldine Meo told the Herald on Sunday.
"They've travelled overseas and they have lived in the centre of big cities so that's why, when they come home, they want to live in Auckland in the middle of everything."
It is just one more sign of the changing times in residential property.
"People are a lot happier to take debt on," said Jeff Staniland, CEO of Mike Pero Mortgages. "They've grown up with readily available credit. The older generation are much more conservative borrowers who were happier to buy the cheap house, do it up and then sell it and do it again. Now people say 'well no, I'll just borrow the money and get what I want now'."
Staniland said there were some very large mortgages out there.
"Not only has people's propensity to borrow increased but also lenders' willingness to lend has changed a lot.
"They are far more willing to lend, and lend a greater percentage [value] of the property. It's a fundamental change."
Generation X and Y may well need to borrow even more in future. Home loan affordability worsened last month - nationally, it now takes 81.2 per cent of the average take-home pay to afford a standard mortgage payment for a median-priced house.
In Auckland, the figures are even worse - 101.4 per cent at the end of June. Matters won't have been helped by Thursday's quarter of a point rise in the official cash rate, to 8.25 per cent. It is the fourth rise since March.
Based on June figures, the average Auckland buyer would need to allocate 12.4 years of their current annual income to afford a median-priced house. This is up from 11.8 years in 2006 and 8.7 years in 2003.
And as affordability continues to bite real estate commentators say more home buyers may be prepared to risk the social stigma and buy in less desirable suburbs.
Property publisher Stephen Hart, author of Streetwise Home Buyer, said he had noticed that some young professional couples whose families have, for generations, lived in middle-class Eastern suburbs were now considering moving further afield - like Papakura and Pukekohe, south of Auckland - to get their first home.
New and established homes in Pukekohe commonly sell in the late $400,000 to early $500,000 range, which may still be expensive in national terms (the national median sale price is $347,500) but compared to Auckland's Herne Bay, where houses typically have million-dollar-plus price tags, it looks relatively cheap.
Hefty Auckland prices were driving buyers out, said Hart. "Because these areas are more affordable, people are prepared to live with the long commute. That's the primary reason why prices are rising fastest in these places," he said. "Soon, home buyers will have to put Ngaruawahia on their shopping list!"
