First-home buyer says all-time low in housing affordability ‘daunting’

Source: 1News

A Whangārei woman looking to get on the property ladder is feeling demotivated as the gap between the average house price and household incomes continues to widen across the country.

According to new data from CoreLogic, it will take the average New Zealand household 11.7 years to save for a 20 per cent deposit. Historically, it took 7.9 years, CoreLogic chief property economist Kelvin Davidson said.

The drastic fall in affordability is also down to value to income ratios.

Across the country, the average property price is just over $1 million - 8.8 times higher than the average household income.

The three regions with the highest value to income ratios include Tauranga at 11.9 times higher, Auckland at 10.1, and Dunedin at 9.1.

Meanwhile, if a household can acquire bank approval for a loan, as of Q4 2021, it will take 48 per cent of your income to service it – up from 33 per cent the same period in 2020. In Auckland, the figure is 55 per cent.

Katie Leeuwenburg told Breakfast the report is “not great news”.

“Growing up, it’s something you always kind of expect will happen, that you’ll own a home one day.”

She said while house ownership “wasn’t a huge priority” for her when she was living overseas in her 20s, “but now, having moved back to New Zealand, I kind of feel like I should be a bit of a grownup and buy a house”.

“It takes the average person 11 years so that’s a pretty long time so yeah, I have been saving and putting some money aside each week, but that goal is… It’s daunting.”

Leeuwenburg said with concerns around the goalposts shifting, it “just makes it not very motivating as well”.

“When you think that that goal is so far away, it’s pretty easy to then start kind of dipping into that savings for other things. It does feel like you’re never going to get there.”

She also pointed to soaring petrol and grocery prices.

“It kind of feels like the cost of living is quite high which makes saving more difficult as well.

She said while the current housing crisis appeared bleak for many, the market could change.

“At the moment, it’s just about continuing to save and hope that one day, maybe, the market does change but then you start thinking, ‘Well, maybe you should be investing your money elsewhere because there are other options out there.’

“If ultimately, you want to buy a home and have a little veggie garden and do some painting and things like that, it’s not just about somewhere to live, it’s about making it a home.”

Leeuwenburg said she’s in the early stages of looking at other options besides a home.

“If it’s starting to feel like owning a home is just so unachievable, if you’re having to save for 11 years, then maybe it is worth investing in something else that could be growing that money for you instead of waiting that long.”