City Sales’ Scott Dunn says that according to new data it ‘s almost never been a worse time for Kiwis to try and get on the housing ladder. Property market analysts CoreLogic’s latest report says it now takes on average nine years to save for a deposit on the average property – even longer in places like Auckland, despite above-average incomes, after a year in which house prices inflated more than the average household earns in a year.
Nationwide, the average house now costs 6.8 times the average household income. Tauranga (nine) and Auckland (eight) are even worse, while Hamilton, Dunedin and Wellington are close to the nationwide figure. The only major market bucking the trend is Christchurch – but even its figure of 5.2 is far above the traditional affordable range – three or below.
The nationwide figure of nine is only just below the all-time highest recorded – 9.1 in late 2016. The Reserve Bank managed to temporarily cool the market by introducing strict loan-to-value (LVR) restrictions of up to 40 percent – just like it will again soon.
If the market plays out the way it did back then, we could be poised to see a bit of a cooldown, which is probably going to naturally happen in the second half of this year as the LVR rules take hold, and also just the affordability pressure will act as a natural handbrake, as the pool of people who can buy just gets smaller and smaller.
In view of all this continuing doom and gloom, Dunn has this piece of advice for young people saving for the deposit to buy their first home. Dunn says, “Why not start with an apartment? An apartment is typically cheaper and easier to save for, and once you have your foot on the ladder you will be in a position to climb the rungs as your property’s price continues to rise”. City Sales are the leading specialists in Auckland apartments and housing investment, so for more information on property management Auckland, selling apartments in Auckland and selling a property please go to http://www.citysales.co.nz .
