Property prices may be down, but Kiwis trying to negotiate the property market say the situation is still grim.
Whether they are first-time home buyers, sellers or trying to renovate homes, New Zealanders are finding it difficult. an expert warns that while relief will eventually come, in the meantime, we’re in for a bumpy ride.
Trudy and David Basire sold their house 10 years ago and always intended to buy again when they returned from Australia. But David says that because they sold at the bottom of the market, the money they got is no longer enough for a deposit.
“We’re in the same position as a first-time home buyer…We’re barely scraping 20% off the bottom of the market.”
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Trudy says house prices haven’t come down enough for the couple to afford what they want. The house they’re currently renting was valued at $725,000 three years ago and is now worth, say, $1.5 million, and the properties they’ve visited still sport “absolutely ridiculous” prices.
This issue is compounded by the Palmerston North couple’s age, the 60-year-old says. With banks reluctant to approve a long-term mortgage for her and David, 55, time is running out to buy.
“They only lend until age 70, so if we don’t buy for five or 10 years, we can’t get a mortgage. We will have to be cash buyers and that will not happen.
And their budget is shrinking. Originally pre-approved for a mortgage of $825,000 including their deposit, which was re-evaluated last year and reduced by $50,000; their loan term was also reduced by two years.
David says the couple have now realized buying a house is probably out of reach, and while that means they can financially support their children, it leaves them at the mercy of the rental market.
“If our landlord sells the house, we’ll be really hard pressed to get anything close.”
Trudy says the thought of renting in retirement without the security of her only home is “scary”.
“That’s what it boils down to, it doesn’t matter which house, or whatever, it’s the security you’re looking for when you get older.”
In Auckland, Helen King says she is privileged to have been able to buy a house a few years ago and is now looking for a property with a little more space.
She and her partner Ross are currently surveying homes in West Auckland where they have found that not only are prices still high, but the properties are not fit for purpose.
“You’re looking at up to $100,000 to upgrade. These are damp dwellings, the roofs of which may need to be replaced, or houses which have been kept as investments, but in which no investment has been made.
King says another challenge is trying to look good in the bank as day-to-day costs now mean all of people’s money is spent on mortgage payments, food and gas.
“If a middle-class couple like us without children becomes ‘holy s…it’s hard’, it’s pretty bleak to think about what other people are going through right now.
“Life is very expensive and it’s very hard to dream. That’s what worries me the most; the growing sense of hopelessness in the community because life is so damn hard for a lot of people.
Financial adviser Glen Mcleod says the general mood of people in the real estate market is pessimistic.
“A lot of people wonder what they will do next because everything they try and do fails.”
Those applying for mortgages find they need more down payment and more income while those selling homes find they have lost equity.
“It’s hard when you see your wealth disappear because the market is going through a correction, that’s all he’s doing right now. It might not last too long, but it has an effect because all of a sudden you can’t take the next step.
Mcleod says the market is experiencing its first real “tight” in about 14 years and while things will improve, it will take time. His advice is that people speak to professional advisers who can advise them on the best ways to pass.
“Take a deep breath, we’re going to have a bumpy ride, we all have to recognize that.”