In Wellington, agents report that buyers have much less purchase power than they did at the end of last year, because of the squeeze on lending and rising interest rates.
Nicki Cruickshank, principal of Tommys Real Estate, says: “In Wellington, first home buyers were able to pay up to $1.3 million six months ago but now I would say they are down to $700,000 to $900,000.”
The fall in house prices in the city has been a positive for those looking to get a foot on the property ladder, with Tommys directing new buyers towards two-bedroom brick and tile unit-type properties, as well as off-the-plan two-bedroom townhouses.
Banks can offer lower interest rates for new builds at about half the normal rates, Cruickshank says.
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“A new build interest rate is I think about 2.75%. The ANZ I think are the only ones offering it at the moment and they are offering a certain amount until it runs out and I think it will probably apply for another six months so first home buyers should definitely be taking advantage of that.”
The occasional three-bedroom house might be achievable for a first home buyer but they would have to look outside of central Wellington, as far as Tawa, Whitby or the Hutt Valley, Cruickshank says. “Those outer areas have taken a much bigger fall than the city, they always do, because people have to go further out as things get more expensive and then as the prices drop it contracts back in again so those outer areas do drop more than the city.”
Unlike some cities, first home buyer locations, though, tend to be scattered throughout Wellington, she says.
The inner-city has apartments within reach, and two-bedroom units can be found in suburbs like Karori, Lyall Bay and Miramar.
First home buyers on a budget wouldn’t have a hope of getting into sought-after suburbs like Seatoun, where the average house price is $2m, but Cruickshank points out Miramar is right next door, as is Strathmore, where there are also affordable places.
Cruickshank says despite there being twice as many homes on the market than last year there are far fewer first home buyers out looking.
She thinks some gave up the home ownership dream when prices were so high and some of those buyers have possibly becoming part of the net migration loss the country is seeing.
It’s a shame because house hunting-wise there’s probably the best choice they have ever had: “Before they had to buy what they could get but now they can actually have a good look around.”
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