Could you buy your own home?
More recent news on property prices getting higher and higher while homeownership is at its’ lowest levels for 60 years and it’s getting harder to buy your own home. So what does this mean for you and what could you afford to borrow?
So what is happening now?
In a recent NZ Herald article, there were comments about what factors are driving prices and what could be done to make more homes more affordable. Currently, investors don’t pay capital gains tax, so they continue to finance more homes and will continue to do so, which means prices will increase, and if landlords don’t get what they want, they leave the property empty. The census in 2019 revealed that 40,000 houses were empty in Auckland.
Some were being renovated, but a number of them were being “land banked”. Sitting and waiting for someone to pay the rent demanded. So unless something is done about disrupting the way investment properties are purchased, funded and sold, house prices will not come down to affordable levels. Do the banks really want property prices to go down after lending 80% to 90% on rental homes? Probably not.
Buy your own home as soon as you can
Now that all the doom and gloom is said and done don’t hold your breath for KiwiBuild to get it right or for property prices to come down. Mortgage interest rates are at an all-time low and lenders have an appetite to lend to new homeowners. The longer you wait, the more you are going to have to borrow to buy a home. Think about this; housing costs were also now equal to 51 per cent of the average income of the bottom 20 per cent of wage earners, up from 29 per cent in 1988.
Stop consumer spending
It is usually the small debts that stop people from becoming homeowners, such as store cards, credit cards, car loan, personal loan. Bit by bit, they grow until they disqualify you financially from buying a home.
Consumer debt is a home buying killer.
Consumer debt may be small amounts, but they all add up and diminish your financial capability for mortgage affordability.
Get advice now!
If you are serious about buying your own home talk to us today so we can help you towards homeownership.