First-home buyers have returned to the market in a rush to get on the property ladder before their plumped-up pre-approvals from the bank expire.
Real estate agents have noticed a huge influx in the number of first-home buyers looking around South Auckland for properties, and many have been trying to put in pre-auction offers in order to beat the competition.
There have been a “crazy” five pre-auction offers on a four-bedroom, two-bathroom home at 83 Twin Parks Rise in Papakura.
Harcourts Papakura listing agent Alex Dunn said they received four offers in the first weekend and they were all made by first-home buyers. The home has a 2021 RV of $1.15 million and a OneRoof property estimate of $1.07m.
Start your property search
And it's not the only property where Dunn has noticed some “very motivated” first-home buyers competing against each other.
Read more:
- TV reno champ hits the jackpot with super-fast makeover of 'nasty' Otara rental
- 128 bids as first-home buyers go hard for ‘ordinary’ South Auckland home
- Trophy rental home snapped up by offshore buyers after near-$1m facelift
“Every property we are dealing with at the moment [has] buyers just desperate to purchase before they have to resubmit for lending,” he said.
Dunn said fear of overpaying had been replaced by fear of missing out, especially as there seemed to be a general consensus that prices were as low as they were going to get.
“We are definitely seeing a lot more of that fear of missing out coming back into the market rather than that fear of overpaying,” he said.
“People’s three-month pre-approvals are coming to an end and they are worried that if they have to resubmit documents their borrowing capacity is going to come down.”
The brick and tile home at Twin Parks Rise was one of the first in the Papakura subdivision to be completed when it was built seven years ago. Photo / Supplied
Kiwi Mortgages financial adviser Jatinder Singh said a lot of first-home buyers have seen the amount they can borrow increase due to the loosening of the Credit Contracts Consumer Finance Act in early June and they don’t want to miss out on using it.
The changes include banks no longer looking at discretionary expenses such as Netflix and Uber Eats, and to a lesser extent one of the major banks dropping its mortgage test rate, which has resulted in about 75% of Singh’s clients being able to borrow between 5% and 10% more than they previously could.
One client went from having a pre-approval for up to $800,000 to spend on a home to $900,000 overnight.
“For a lot of customers what happened was that they had been looking to buy, but they couldn’t because their approval was low. Now suddenly their approval has gone up and what they are feeling is if the bank changes its policy again and their limitation goes down, then it is better to buy the property now.”
A lot of first-home buyers are also taking advantage of the First Home Loan scheme where Kāinga Ora underwrites the loan, and they only have to put up a 5% deposit instead of the normal 20%.
“A lot of people are understanding and thinking that these higher interest rates are only for a couple of years, but the prices are down for now. So, it’s better to buy now. Yes, they are going to pay higher interest for a couple of years, but then later on after two years when the interest rates will drop, they will be in a better position because then the prices will go up.”
EasyStreet Mortgages financial adviser Gareth Veale says it is getting easier for first-home buyers. Photo / Supplied
Harcourts Papatoetoe salesperson Harsh Kathuria said most of the properties he’s selling that are currently under offer are being sold to first-home buyers.
“You can feel that first-home buyers are saying directly or passively, ‘that’s it, it’s not going to go down further’ because there are a few articles floating around ... and saying yes that’s it, that’s the bottom of the market – it might not go further down from here.”
A first-home buyer told him he was not being put off by the higher interest rates, which are hovering around 7%, because he had never seen 2% or 3% so it didn't matter and he just wanted to buy a home.
Ray White Manurewa salesperson Tom McCartney has also seen an influx of first-home buyers in the market and recently sold a renovated property on Waimate Street, Otara, in the mid-$800,000 to a pair of first-home buyers.
“I guess they are reading the newspapers and are starting to see that inflation is on its way down. If that trend continues, at some point interest rates will follow. The bottom might have even past potentially.”
EasyStreet Mortgages adviser Gareth Veale said in the last month it had got easier for first-home buyers to borrow and believes it is a good time for them to be buying, especially as things have been known to change after the three-month pre-approval period.
“This is the high ebb of the market in terms of interest rates, it’s the low ebb of the market in terms of the cost of housing. Interest rates go up, the cost of housing goes up because people are willing to pay more because there’s more competition.”
- Click here to find more properties for sale in Auckland
