COMMENT: I’ve had the very real privilege of mentoring many people in their property journey over the years – but by far the most satisfying of these relationships are those which have involved helping people get into their first home. There are few things as fulfilling as knowing that you’ve played a part in helping to get someone onto the property ladder and, as I’ve stated many times before, if I had my way, first-home ownership would be one of the primary policy aspirations of any government.
Why? Because home-ownership transforms our relationship with society. It enhances our sense of civic responsibility, amplifies our contribution to the economy, gives meaning to our participation in social democracy and, over time, increases our wealth.
In fact, New Zealand house prices almost exactly doubled in value, on average, in every decade between 1980 and 2010 – and doubled again in the 12 years between 2010 and 2022 – with that growth in house values giving us the freedom to travel, invest in businesses, assets and ideas, improve our lives and prepare for our retirement. It’s primarily for this reason that I strongly believe that there’s no ‘bad’ time to buy and that the right time to get into the market is as soon as you’re in a position to do so.
If you’re a potential first-home buyer and have read this far you probably already know all of this – but you may also be holding back from acting based on uncertainty about house prices or interest rates, or in the belief that you might be able to snap up a bargain by waiting a bit longer.
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These thoughts are neither unreasonable, nor new – in fact every generation of first-home buyers that went before you have grappled with the same issues – so here are some questions that might help you to decide whether waiting is really the right choice for you:
1. Did you predict that the property market would peak in November of last year?
If you didn’t see the sudden turn in the market coming last year, you’re in good company. No one did. For all of the headlines, commentary and hyperbole – not one economist or commentator saw the peak coming and they were all caught off guard. My point? The same is true with picking the bottom of the market. Everyone thinks they can do it, but no one really can – and when it turns, it can turn quickly.
2. Once you’ve bought a home, is it your intention to own one for the rest of your life?
If the answer to this question is yes – if your plan is to remain a homeowner in either your first or subsequent homes – then the time to buy is now. Why? Because the medium to long-term trajectory of house prices is up which means that whatever you pay today will be eclipsed by what your house is worth in 10, 15 or 20 years. I once haggled over the last $5000 in a house purchase where I eventually paid $371,500. Eighteen years later that house is now worth around $1.8 million. The rate of growth may not be at quite that pace going forward, but it illustrates the importance of keeping the bigger picture in mind.
Ashley Church: "Home-ownership transforms our relationship with society ... and, over time, increases our wealth." Photo / Ted Baghurst
3. Are you hoping to get a bargain?
Buying now doesn’t mean you can’t make a great purchase. One of the advantages of a flat market is that everything is up for negotiation. If you have the luxury of time, test the market to see whether that place you love really is out of your price range. If you’re ready to buy, the headlines are irrelevant. It’s all about what goes on between you and the vendor.
4. Do you expect to be earning what you’re earning now in 20 years?
I already know your answer to this question – it’s ‘no’. Of course you expect your income to increase over time – and the same is true of pretty much every other aspect of your life. Life is about change and challenges – some will be good, some may be not so good – but most of us come through the tough times stronger for the experience. Nothing in life is certain – but owning your own home will give you a degree of independence and stability which will make it that bit easier to face the challenges that might come upon you.
Best of luck, whatever you choose to do.
- Ashley Church is a property commentator for OneRoof.co.nz and a real estate business owner. Email him at [email protected]
