The New Zealand housing market has been on an upward trajectory for the past three years, with all areas seeing an increase in house prices and most regions reaching record highs.
In 2022 it can feel impossible for new home buyers to get on the housing ladder. The good news is that there are still many ways first home buyers can buy a home in New Zealand in 2022.
Housing experts say 2022 is the best chance buyers have had of purchasing a reasonably priced property for years because the market is experiencing a slowdown.
Stricter lending criteria have reduced the number of buyers in the market while rising interest rates and more significant taxes for investment also reduce the amount of competition.
While there is no guarantee that the market will continue to soften, there are predictions that from July, there will be more easing in the market and, with it, an increase in the number of affordable homes.
With more affordability predicted, it’s a good idea for hopeful buyers to get their finances in shape now. Banks are stricter with their lending after new rules under the CCCFA, which came into force in December. Banks are now required to look at your spending much closer than in previous years before they can approve you for a loan.
In the months ahead, start reducing your non-necessary spending. You can do this by:
Don’t limit yourself by going to just one or two banks for your mortgage. A mortgage advisor doesn’t cost anything and works to get you the best mortgage for your circumstances.
With access to a broader range of lenders, you might also want to consider a mortgage from a second-tier lender. A second-tier mortgage isn’t a ‘bad’ option if you understand the repayments and interest rates.
If you are very close to getting a home loan but have struggled to secure your mortgage, paying a slightly higher interest rate for the short term can be a smart strategy. An advisor can talk you through the pros and cons of each type of mortgage and hopefully get you into a home faster.
If you are a first-home buyer, the government, through Kainga Ora, has set up a range of grants to help you into your home faster:
If you’re a buyer who has been making regular contributions to KiwiSaver for 3-5 years, you may be eligible for a grant of up to $10,000 for a new home or land, or $5,000 to put towards an existing home.
If your deposit and home loan aren’t enough to buy a home, the first home partner initiative can help you bridge the gap through shared ownership. Over time, you’ll buy out the proportion that Kainga Ora owns, up to $200,000.
Get a first home loan through Kainga Ora and only put down a 5% deposit. These home loans are issued by selected banks and underwritten by Kainga Ora.
New lending rules have made some homes less desirable for some buyers. For example, homes that need renovation work will no longer be appealing to many investors now that mortgage interest is no longer deductible. Many young families also don’t want to buy a home that requires work.
New home buyers should also look in areas where listings have dramatically increased. With more homes on the market, there is a better chance you will be able to buy a home at a lower price.
Aim to attend a wide range of open homes to get a good idea of what is on the market and what homes might have less competition. Being able to spot a diamond in the rough, and being willing to put in a little work, could save you thousands on your mortgage.
Although supply chain issues are causing some new builds to halt construction, there’s still a huge benefit to buying a turnkey home. ‘Turnkey’ houses are sold off the plans and once sold, are then built by a construction company or property developer.
There are lots of pros to buying a home off the plans. You can:
Buy for a set cost and won’t have to outbid your competitors.
Get all the benefits of a new home without doing any project management.
Continue to save money for your mortgage after you put down your deposit.
Lock in any capital gains made during the build period without paying more when you move in.
Put down a smaller deposit. Many property developers only require a 10% deposit.
New buyers still have ways to get on the property ladder in New Zealand in 2022. Securing a new home can be stressful, but moving into it doesn’t have to be. We have a wide range of trusted movers that can move your furniture and household items from and to any location. Take the stress of moving off your shoulders with Wise Move.
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