May 21, 2016 8:00:00 AM

Ditch the luxuries to save for your first home

Topics: First Home, Property Article 0


According to state-owned valuer QV, New Zealand property value growth slowed down in March, although Auckland is seeing signs of a resurgence. As property prices continue to rise and first home buyers struggle to get onto the property ladder, it’s time to ditch the luxuries and put more cash into your savings. Read on to find out more in this month’s property article.

Property growth slows in March

Across New Zealand the average home value rose in March to $559,492 at a rate of 11.4 per cent, down from February’s 11.6 per cent and January’s 12.6 per cent.

Many of the provincial centres are seeing the fastest rise in home values since before the 2007 peak, including Whangarei, Napier, Rotorua, Taupo, Carterton in the Wairarapa, as well as the Central Otago and Queenstown Lakes Districts, says CV spokesperson Andrea Rush.

“Regional areas within commuting distance to Auckland, Tauranga and Hamilton also continued to show significant value rises including towns located in the Waikato, Waipa, Hauraki, Western Bay of Plenty and Kaipara Districts,” she said.

“The only areas to see a drop in home values over the first quarter of the year in the North Island apart from parts of Auckland were Otorohanga, Wairoa, South Taranaki and in the South Island, the West Coast districts of Buller and Westland as well as Ashburton and the Christchurch Hills suburbs.”

Property values slowed for a short time but are on the rise again in Auckland, with an annual increase of 16.9 per cent to $931,061, primarily driven by a shortage in supply and a rapid growth in population.

"Home values have risen in most parts of New Zealand in the first quarter of 2016 with the exception of the Auckland region where values have been on a slight downward trend over the past three months. However, over the past few weeks’ activity and demand have begun to pick up again across the 'super city' and values have actually risen again over the past month by 0.6 percent, so it appears the downward trend may be coming to an end.”

Get serious about saving

As first home buyers continue to struggle in a rapidly rising property market, many are being told to get serious about saving and cut out debt, particularly when it comes to luxury items.

The Herald recently launched the Home Truths series, which follows three house hunters through their journey to buying a first home. All three couples are saving as hard as they can and have one message for young people wanting to get onto the property ladder: cut out the luxuries to save for your first home.

27-year old Lovely Garg, along with her husband Bharat, 31, searching for a $630,000 property on their combined annual income of $110,000, said "We cannot think about affording the luxury car and Sky TV."

About 65 per cent of the couple’s after-tax income goes towards rent and utility bills, with the rest on staples like food and clothing. Lovely says the couple thinks twice before buying something outside of the budget.

Gemma Mann and her husband Mike Alsweiler are looking to buy in a similar price range on a similar income. They carefully budget every pay day to cover their rent, petrol, weekly food shopping and other expenses, but say they are still struggling to keep up with rising house prices.

Let’s talk

If you are a first home buyer and you need advice on buying your first home or planning ahead to ensure you’re in a financially secure position to buy, get in touch with us. Our mortgage advisers will help you track your expenses and provide financial planning to help you get to where you want to be.