How to survive the boom: Experts’ top tips for frustrated buyers

New Zealand has been through property booms before, usually off the back of low interest rates, but the country has never before seen rates as low as 2.5 per cent and under.

READ MORE: Find out if your suburb is rising or falling

House buyers are out in force, leading to such hot action in auction rooms many are left disappointed and frustrated they have once again not been able to secure a home.

OneRoof spoke to experts on how to get through a tough time in the housing market.

Nick Tuffley, chief economist, ASB:

- Be clear about your goal and be focussed on achieving it. Don’t let short-term setbacks get in the way. As a buyer at the moment the really positive thing is your debt servicing costs are much lower. Don’t give up. Housing markets go through cycles. We look like we’re going through an upswing at the moment but things will taper off once the initial boost of very low interest rates works its way through.

- The other thing is there is now that greater opportunity to really address some of the thorny issues like the Resource Management Act which mean we have a lot of regulatory hurdles holding back effective supply of homes. We also need to be looking at things like the urban boundaries as well because we do have a tendency to artificially restrict the supply of urban land. We do have a Government that has a clear mandate and desire to do something about housing costs and housing affordability. It could take a little bit of time but the intent will be there.

John Bolton, founder of Squirrel mortgage company:

- I just think perseverance. Don’t get too carried away with the hype of the market. Expect to look at a lot of property. Most of my clients are managing to buy eventually and they’re often buying a property they really love but they’re not getting it first time round. It takes energy and perseverance but people are buying. I think one of the positives we’re seeing is the amount of new building of terrace, townhouses and entry level property – developers are building a lot more entry-level property which is good to see. There’s some really nice stuff out there.

Campbell Dunoon, Barfoot and Thompson auction manager:

- You have to be prepared to go to an auction and walk away not owning — this time. It’s a matter of time and persistence. When I was buying my own house, it took me three attempts to get the property I wanted. If it’s that sought-after, it’s going to hold its value and there should be a similar amount of competition when you come to sell.

- There’s a lot of activity in the market, so people need to get ready for an auction. You have to have finance approved prior to the auction. I don’t ask people to skip their due diligence, but in the current climate you need to be prepared early, as vendors are entertaining early offers and bringing auctions forward.

Lesley Harris, First Home Buyers Club:

- Pay down debt. One of the biggest struggles at the moment is getting a mortgage at all. The banks’ appetite is not great in terms of lending and they’re being very conservative. The most important thing is people are very, very mindful around debt because if you can’t get that under control you’re not going to get a mortgage. You can go to all the auctions you like but if you don’t get the lending you won’t get the house. You’re better to get rid of your debt and be the best customer you can be when you do go to the banks.

- If you are drowning in debt, get a longer-term strategy to address that. At the moment, even if you’ve got a deposit you will not get lending from a bank. After that, consider all other options. Tier two lenders are busier while banks are being more conservative, so look at a tier two lender. Go to a mortgage broker who specialises in first home buyers. They will hand hold you through the process.

- Be an absolute expert. Know every single option in every single area. Do your research, know the areas and be flexible. And make sure you tap into every possible thing you can. For example, if you’re not in KiwiSaver why on earth not? You’re not going to be able to get some of the grants, and we’re really hopeful some of the caps on some of those grants will be increased (above $650,000). Make sure you’re really aware of everything available, like the Home Start grant and the Welcome Home loans.

- Consider shared equity. This is a company which buys a portion with you to get you into the market and you can buy them out. Look at going in with family or friends or a shared equity scheme. Look at home ownership a bit differently to what we did maybe 10 years ago. Be more open to options like apartment living, townhouses, terraces. Consider things like a two bedroom you can upgrade in a few years. Don’t go ‘we need to have three bedrooms because we might have children’. You’ve just got to get in where you can get in.

- Look at further out. If you’re a first home buyer you’re not going to get a four-bedroom house on a full site in Sandringham so look at some of those outskirt areas, outside of the big centres. Covid has changed the way we do business so you can now have more choice in terms of where you live. There are affordable houses but they are more on the outskirts, they’re not in the central city.

- Look at a new build. There are some really good ones out there and some good deals in terms of them being turn-key so you don’t pay until you get the key and your deposit is lower. So off the plan with solid reputable companies. I know of a number of first home buyers who have got into the market that way, bought really well off the plans and made some really strong capital over the last couple of years.

- Add value. Look at a property that is possibly in a lower price bracket with really good infrastructure going in. Look for some of the more under-valued suburbs. Look at the potential of the property, don’t just look at what’s presented in front of you. Turn the laundry into a study or third bedroom and put the laundry in the kitchen. Add things. Get expert advice on what you can do to a property to increase the value. Don’t just write it off because it’s the wrong colour.

- If you’re going to auctions and missing out put it down to research – take some of the emotion out. It’s not a lost opportunity knowing how many people went and how much it went for, that’s just getting you more informed. Don’t necessarily see the house as your forever house. Maybe it has to tick five boxes but maybe it won’t tick 10, and that’s okay, and know if you buy you don’t have to live there forever but it’s a foot on the ladder.

- Keep trying – completely keep trying. Things will settle down.