Get on the Ladder or Get Left Behind

A ladder going up the side of a building

The title statement might sound harsh, but it reflects the current state of affairs for home buyers in Auckland’s property market.

Experts predict that this hot housing market is unlikely to cool down anytime soon. The country’s economy and job market keep going from strength to strength only helping the property market. Well known independent economist Tony Alexander said that a lot of people were hoping to get onto the property ladder post-COVID due to anticipated lower prices. However, things have not played out in the way they might have expected. So, the problem of demand and supply continues.

An auction gavel at a home auction
Facing the gavel is a daunting prospect

The auction room is proving to be a hard place to win

The auction room blues are back. Buyers are going to auction expecting not to win any of the homes going under the hammer because of the current situation. Experts warn buyers not to get emotionally attached to houses because that will just end in disappointment. There’s really no way to tell how much a house will sell for with even the top real estate agents finding it hard to predict. CVs are no help either in terms of estimating a sale price.

Rising graphs depicting house prices increases
CVs don’t reflect what a house will sell for

The Kiwi dream of a house and large section is gone

Large sections are going for huge sums of money and the dwellings on them are either being demolished or sold. Houses built on that land are just not coming up fast enough to calm the demand and houses sold off the plans are also going extremely quickly. Where do first home buyers go?

REINZ CEO Bindi Norwell says that unless more cost-effective homes are built on a larger scale then this could lead to a perennial housing shortage.

Another expert said that construction is steaming ahead but the right product isn’t being built. She continued on to say that there should be more houses built to cater to the needs of first home buyers rather than expensive four + bedroom homes that are just filling an oversupplied segment of the market.

Keys in a house door
Paying off a mortgage rather than rent is looking appealing to first home buyers

Alexander went on to say that reintroducing the LVR (loan to value restrictions), won’t affect the market. He cited supply as a major problem where shortages of builders and tradespeople continue.

Experts are saying that the expectations of first home buyers are too high. Many of them keep hoping to make their first home a dream home. That just isn’t going to happen, not in this market especially. They suggested that first home buyers should look at taking a step onto the property market somehow. Just having a property can help them build equity for the future. Choosing to move into an affordable apartment now can help them eventually acquire a long-term home later on. They shouldn’t view their first home as their last but instead look at buying something to live in today.

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