Own outright in less than six years: Suburbs where Kiwis can pay off the mortgage fastest

Kiwis could own a home outright in less than six years in a clutch of suburbs around the country, according to new research from OneRoof and its data partner Valocity.

With the latest OneRoof house price figures showing the swing to a buyer’s market, OneRoof and Valocity decided to look at the purchase power new entrants have in the market.

The analysis identified the suburbs where new homeowners could pay off their mortgage the fastest.

Assuming a buyer was intending to pay $1000 a week on their mortgage, on a two-year fixed interest rate of 6.75%, the research identified 46 suburbs where a mortgage could be paid off in less than 10 years.

The analysis calculated the amount buyers in the current market would typically need to pay back, based on the average property value for each suburb less 20% (the standard amount a buyer would need to stump up for a deposit).

The figure of $1000 a week was based off of recent figures showing average home loan repayments for first-home buyers.

Only suburbs with 20-plus settled sales in the last 12 months were examined.

OneRoof editor Owen Vaughan said: “Patea, in South Taranaki, topped the list, and offered new buyers the best chance of being mortgage-free within the shortest timeframe – just 5.7 years.

“Close behind Patea were Mataura, in Gore, and Cobden, in Grey. Buyers in both towns could have paid off the mortgage by 2030 if they bought this month.

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“All 46 suburbs identified in the research had low average property values – the highest was $465,000 – and most were in remote communities.

“Only 11 of the suburbs were in major towns or cities, with South Dunedin the best major metro option for those looking to pay down their mortgage quickly.”

In total, there were 391 suburbs that offered buyers the chance to be mortgage-free within 30 years. The most expensive suburb to feature on the list was Manurewa, in South Auckland. Its average property value of $836,000 meant buyers paying $1000 a week were unlikely to be rid of their mortgage until 2054.

A hundred and nine suburbs (more than a quarter of the 391 that met the threshold) were in a major metro.

Valocity senior research analyst Wayne Shum: "The research suggests buyers wanting the big-city lifestyle and a quick mortgage exit would be better to concentrate their efforts in Dunedin and Christchurch." Photo / Fiona Goodall

Valocity senior research analyst Wayne Shum said there were a lot of variables to consider when buying a house, including employment opportunities, how long it takes to travel to work and schooling for children, but the figures highlighted that being mortgage-free was in reach, if buyers were prepared to consider lifestyle changes.

“The research suggests buyers wanting the big-city lifestyle and a quick mortgage exit would be better to concentrate their efforts in Dunedin and Christchurch, which had the biggest share of affordable suburbs,” he said.

Thirteen Auckland suburbs joined Manurewa on the list with apartment-heavy Auckland CBD offering buyers the quickest route – 14.5 years – to owning outright.

Only three Wellington suburbs featured on the list, reflecting the lack of affordable suburbs in the capital.

The research also indicated that first-home buyers in Queenstown’s Glendhu Bay faced the steepest mortgage sentence. The remote spot favoured by rich-listers has an average property value of just under $10 million and would need to stump up $11,500 a month just to be able to repay the mortgage within 30 years.

Metcalfe Real Estate agent Latesha Berry, whose patch covers Patea, told OneRoof buyers would find exceptional value for money in the town, citing as an example one of her listings. The property at 2 Egmont Street, is a three-bedroom home on a 1000sqm section with views of the golf course and the sea and is seeking enquiries over $349,000.

She also highlighted the opportunities for investors, noting that weekly rents ranged between $480 and $500.

2 Egmont Street, in Patea, is is seeking enquiries over $349,000. Photo / Supplied

“The Patea community is amazing. People are so supportive. There’s not a lot in terms of the town itself but your just over an hour to New Plymouth and only 45 minutes to Whanganui,” Berry said.

Ray White agent Sarah Hoffman was equally enthusiastic about Mataura where sections could be picked up for $55,000-$80,000 and homes bought for $200,000-$300,000.

Many of the town’s residents worked at the local freezing works and were on good salaries, she said. “Mataura is a pretty tight-knit community. It’s 10 minutes to Gore or 30 minutes to Invercargill.”

Her colleague Janine Johnstone has a tidy three-bedroom, two-bathroom home at 79 Oakland Street for sale at $349,000 while Bayleys’ Julie Mitchell has a lifestyle property with a 2022 RV of $550,000 at 118 McIllwraith Road for sale by way of price by negotiation.

“I think it’ll be interesting after July when the bright-line test goes to see if there are more investors around,” Hoffman said.

Mortgage Broker Campbell Hastie, from Hastie Mortgages, said most of his Auckland clients were focused on keeping things as lean as possible in the current economic climate.

“You do see people pay off their mortgages and certainly within 30 years because they have to but for those that really knuckle down, it is possible to do it sooner,” he said.

A three-bedroom home at 79 Oakland Street, in Mataura, Gore, has a $349,000 price tag. Photo / Supplied

“I don’t know how likely it is that someone would buy in Patea and spend the rest of their lives there.”

Homeowners who are wrestling with higher interest rates would be served to remember even after the Global Financial Crisis interest rates did eventually come down. But he advised many clients to keep their repayments the same if rates drop.

“Those that did keep their repayments the same were able to eat into their mortgages significantly. I’d probably be advising my clients of a similar strategy as we hopefully start to see interest rates reduce next year,” he said.

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