First home buyers are less confident about being able to buy a house than they were nearly a year and a half year ago when New Zealand was heading into the Covid 19 crisis.
Those living outside Auckland are especially worried, including in regional centres such as Whanganui, according to the results of a survey by the First Home Buyers Club on behalf of OneRoof.
Instead of house prices crashing as the world headed into unknown territory when the pandemic gripped, prices escalated not just in the big cities but in regional New Zealand, too.
The survey asked members how confident they felt about buying their first home in the next three months and also in the next three years, and found people less upbeat.
Just over 60 per cent of 500 respondents were not confident of being able to buy in the next three months, compared to just over half last year, a 10 per cent rise.
On the other hand, the number of respondents who were confident fell, from 21.95 last year to only 11 per cent this year.
First Home Buyers Club director Lesley Harris says the results are to be expected based on soaring house prices and the fact nothing has been done to mitigate them or help with deposits, or soften bank lending criteria.
"We're just going to keep seeing this confidence dwindle off, unless the market plummets, which it's not going to, or there's some significant changes to Reserve Bank policy."
The survey found the least confident groups of being able to buy in the next three months are those living outside of Auckland (72 per cent) and those aged 45 or older (66 per cent).
Harris says while houses in the regions have become way more expensive, salaries haven't gone up.
"People have fears that more and more people from the bigger more expensive suburbs are going to go into their areas and buy up their properties because they're more affordable, which will just continue to price them more ferociously out of the market."
The survey also asked how confident people were of being able to buy their first home in the next three years and found people not confident had increased from 15.54 per cent last year to 24 per cent this year, but the numbers who were confident had hardly changed, from nearly 22 per cent last year to 23 per cent this year.
Harris says this likely shows people thinking the outlook in the next three months is worse than for the longer term because the average person, including her, thinks something has to eventually give.
"I think people to a certain level have gone 'it's now got so bad that it might not be addressed now by this Government but you've got to have hope that someone, somewhere is actually going to sit up and take notice.'"
The problems with the housing market range from the soaring prices, which make it even harder to get deposits together, to cost of living increases, including rent.
And with the Reserve Bank's most recent changes, buyers that might have been able to use a 10 per cent deposit for a new build will now find that off the table, plus the country faces huge supply and demand issues.
"We've got three prongs of the problem just burning at the speed of lightning and everyone in Government sitting there going, 'well, we've given these wonderful solutions' which are completely not aimed at the poorest people in our community; they're just random things which don't really help anyone."
The survey found 81 per cent of respondents were worried about rising house prices and 76 per cent were worried about a lack of affordable housing, and over half were worried about not being able to borrow enough for a house (57 per cent) and/or save enough deposit (51 per cent).
To get a $600,000 mortgage, people need a combined income of around $150,000 - but the average combined salary in Auckland is only $93,000, says Harris.
She was not surprised the survey showed Government housing announcements had either no influence or only a little influence on confidence to buy in over 80 per cent of respondents, saying changes had been inadequate and showed the Government did not understand the housing crisis.
"It's not a home buyer crisis – it's a housing crisis. We've got a rental crisis, too."
James Wilson, director of valuation and innovation at OneRoof's data partner Valocity, says Government policy intended to tilt the balance back towards first home buyers hadn't achieved that.
The survey's results were understandable but he urged first home buyers to not give up and to still talk to their bank or broker.
"If they think they can't ever afford the deposit then they write it off as an option rather than keeping the savings going and they go and buy a new car.
"I think there's a danger of letting it become too self-fulfilling or defeatist."
That applies to those aged over 45, too, who have less earning years left.
"Don't say 'bugger it, I'm too old, I'm not going to bother.' I think banks are very practical around people's working lives extending therefore the servicing rules that might have been applied 20 years ago are different now."
But Wilson also says part of the issue is how fixated Kiwis are with home ownership.
"They're told if you don't own a home you're a failure. They've got that mentality ingrained in their mindset.
"But in reality they might be renting in a part of town they love with a local café, and they have the ability to invest or build that retirement nest-egg in other ways like shares or investing in a business."
Wilson says he does feel for people living outside Auckland where there has been tremendous house price growth, such as in Gisborne where value growth is up between 20% and 40% in the last 12 months.
"When you're a first home buyer in Auckland, and people say it all the time, 'why don't you look outside of Auckland?'
"When you're already in the smaller regional centre, where do you go next?"
People in these situations could explore models of joint ownership, such as ones through Kainga Ora or through private schemes, he says.
Property Brokers Whanganui real estate agent Vicky Todd said the figures in the study were a striking comment on the state of the market.
"We're still seeing lots of first home buyers in the market, but it's a serious struggle. I feel for them," Todd said.
Todd said first home buyers in Whanganui were looking at between $500,000 and $600,000 for a decent property and, even putting the price tag aside, the properties themselves were difficult to come by.
"We're seeing first home buyers getting parental help with mortgage guarantees and things like that. First home buyers are certainly out there, but it's very tough for them."
In Whanganui, the demand for properties from investors reduced markedly after the government's announcement on tighter investment restrictions, but investor interest had again picked up.
"It quietened down after the government made the legislative changes, but the last weekend of the school holidays, it went crazy again. We've been inundated again.
"Every day the figures surprise us. It's very hard for us to guide our buyers - we don't know where the prices are going.
"There's no doubt - it is very tough for the first home buyer."
- Additional reporting by Ethan Griffiths