Mindset can be the biggest challenge for people who have always rented and haven't considered getting a mortgage. That's the message for Tūrangi residents after figures were released showing locals may be better off buying a house rather than renting. Taupō & Tūrangi Weekender reporter Rachel Canning reports.
You're better off buying a house in Tūrangi than renting, according to new figures.
A breakdown of where it's cheaper to buy than rent in New Zealand has been carried out by OneRoof and its data partner Valocity. Excluding Auckland, the data shows Tūrangi residents have the sixth-biggest gap between what you pay in rent versus what you pay in mortgage.
The average monthly rent in Tūrangi is $1628 and the average monthly mortgage is $1117. Other towns where renting is more expensive than paying a mortgage are Invercargill, Whanganui, Shannon, Rotorua and Tokoroa.
The figures compared the monthly mortgage repayment on a median sale price for more than 900 suburbs across the country, excluding areas with fewer than 20 rentals and 30 sales, and assumed an interest rate of 5 per cent on a 30-year term with a 20 per cent deposit.
OneRoof editor Owen Vaughan said the figures didn't include additional housing expenditure such as rates, insurance and maintenance costs.
Of 13 areas compared in Taupō District, monthly mortgage repayments are higher in all apart from Tūrangi.
Renting was a cheaper option in Taupō's more expensive areas, including Kinloch, Waitahanui and Acacia Bay, while there was less than $200 difference between renting and owning a home in Taupō Central and Richmond Heights.
Vaughan said the lower mortgage rates being advertised by the banks were unlikely to last the length of a 30-year loan so the calculations were done on a 5 per cent interest rate to give a more accurate figure.
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"First-home buyers should be encouraged by the data. It will give them a good guide as to how they could structure their budget and see beyond what can be a challenging effort to save for a deposit," Vaughan said.
"Conversely, for investors, the data provides a guide to where the best returns are in New Zealand. Anywhere where rent outstrips mortgage repayments by a huge margin would be worth further investigation."
A Westerman Property Solutions Tūrangi property manager said that across their portfolio for houses rented this year, the average rental was $300 to $350 per week.
Bayleys salesman Maurice Heappey says the rental figure looks a little high and said he would like to see a breakdown of where the data relates to.
He says the picture will be skewed if the figures include the southern lake settlements.
"The data should focus on Tūrangi township. Most of the permanent renters are in the main hub of Tūrangi town."
Maurice says mindset can be the biggest challenge for people who have always rented and haven't considered getting a mortgage.
"They don't know what's involved or how to go about applying for a mortgage."
He says that saving for a deposit to buy a home in a small town like Tūrangi is a lot easier than saving for a deposit in the city.
"It's about disposable income and having a savings target."
Mortgage Link mortgage broker Wendy Yorke says for her first home buyer clients in Tūrangi, the cost of a mortgage is comparable to renting rather than cheaper.
"By the time you factor in rates, insurance and maintenance then you are probably paying about the same."
She says many first home buyers are aiming to maximise their KiwiSaver for a deposit.
"Someone on the minimum wage who is in KiwiSaver for five years will contribute around $5000, their employer will contribute $5000, the government contributes $2500 and they can aim to access the HomeStart grant, up to $5000. That's $17,500 towards a deposit. If their partner can do the same then they have a $35,000 deposit for a first home."
"If it turns out that person is not currently in a position to buy a house, we can tell them what to do to get in a position to buy."
Wendy says a huge benefit of home ownership is you are not at the mercy of the landlord.
"You don't have to worry about the landlord asking you to leave, or worry about the property being sold.
"You need to look at home ownership as a roof over your head."
For more property news and listings go to oneroof.co.nz