First-home buyers - and investors - look to Dunedin
Tuesday, 31 July 2018
Hamilton woman Angela Cuming is moving to Dunedin in search of an affordable first home for her family.
She and her husband had always thought they would settle in the Waikato city. But, when they applied for a mortgage, they were disappointed.
Although they had saved $80,000 for a deposit and had household income of $130,000, they were priced out.
'Having three kids makes it more difficult. So a friend of mine moved from Auckland to Dunedin and loved it and we went from 'ha, that's a thought' to 'hey, let's seriously consider this'. The house prices were a big drawcard, obviously, but we've both been down to Dunedin and love it. And happily neither of us mind the cold.'
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They can both take their work with them, which was a big factor in the decision.
Cuming said it was still hard work finding a property.
They had put offers in on two places so far and missed out. Each open home had 20 or 30 families, she said.
'I suspect on both occasions property investors - or at the very least young buyers being helped by the bank of mum and dad - have put in much higher offers.
'I've seen quite a few three or four-bedroom homes that have been for sale in Dunedin that pop up a month or so later on the rental market. It makes me very angry and frustrated to see homes being marketed as 'perfect for the first home owner or investor'. It's like, you already have your house, leave the others for families like us to have a shot at buying.'
QV says first-home buyers such as Cuming are a bigger part of the market these days. Its July statistics show more transactions happening in the low-to-medium price bracket.
Value growth was fastest in that section of the market, amid flat prices across the country. Nationwide, values rose 5.1 per cent in the year to July, but dropped 0.7 per cent over the quarter.
Reserve Bank data shows first-home buyers borrowed $803 million in June, compared to $713m last June.
QV general manager David Nagel said first-home buyer activity was strong across much of the country although some areas had had a drop in the past few months.
'This could possibly be due to the fact that some buyers are holding off purchasing, hoping they'll attain a KiwiBuild property in the ballot. We'll be closely monitoring the impact of the government's initiative over the coming months although its full impact won't be felt for some time yet.'
It was likely Cuming was right she was facing off with investors in Dunedin, though that was not the case in most of the country: 'Dunedin continues to buck the trend, with investors accounting for a growing portion of buyers according to the latest CoreLogic buyer classification data. With an average value of $411,669, investors are attracted by a relatively low values and strong yields. Investor activity has dropped over most our main centres, partly due to the bank's LVR restrictions and a period of consolidation after recent growth.'
In Auckland, prices were up 0.6 per cent year-on-year and down 0.1 per cent over three months.
Auckland senior consultant James Steele said properties that were well presented and selling for less than $650,000 were selling well.
'This is understandable given the current affordability challenges and built-up demand from first home buyers. We're continuing to see a high proportion of properties come to market as price by negotiation as opposed to auction, largely due to reduced demand created by stricter lending conditions.
'With less demand, sellers are adjusting expectations and are more open to negotiation in order to get their property sold. In general, this has limited the value growth seen over the previous period and kept prices stable with some softening occurring in properties which have issues or are poorly presented.'
He said sellers were not getting the premium prices they might have before new loan-to-value restrictions were introduced for investors in 2016, which required them to have a 40 per cent deposit. That has since been dialled back to 35 per cent.
Wellington values were up 7.1 per cent over the year. Christchurch was flat.
'Mid-winter has seen market activity fall away, which is a regular occurrence during the Wellington winter,' senior consultant David Cornford said.
'The lower-to-mid section of the market - those properties valued under $750,000 - have experienced the greatest value growth over the last 12 months.
'This is a result of strong activity from first home buyers, who are snapping up relatively affordable properties in Wellington's outer areas such as Lower Hutt, Upper Hutt and Porirua. Porirua, in particular, has performed well with around 3 per cent growth over the last three months.'
He said there was less growth in the top end of the market.
'Much like Auckland, we're seeing some higher value properties failing to sell at auction or tender and then selling several weeks later through negotiation. Multiple offer scenarios are now less commonplace, which is giving buyers the time to be more considered with their offer price and terms.'
Property listings website Realestate.co.nz said there was a surge in interest in July. The number of searches on the site returned to 2018 summer levels.
'Typically, interest in property peaks in the first quarter of the year and then gently declines as we head into winter, before lifting again as we head back into spring,' said spokeswoman Vanessa Taylor.
'June is usually more active than July, as measured by unique users. To see this jump in July is unusual, particularly when it registers numbers equivalent to summertime browsing. While it's yet to be seen whether this translates into an increase in sales, it indicates that Kiwis are still engaged in the housing market.'
The total number of properties available for sale nationally fell 3.8 per cent compared to the same month in 2017. Asking prices increased marginally across the country, up 0.9 per cent compared to June 2018.