So I live in Auckland. If you’re from New Zealand I’m sure you know all about the absurd house prices in this city. Its property market is driven by competitive property investors, high property demand and low mortgage interest rates. For the past years, the house prices just kept going up. Hopefuls including economists believed it is a bubble soon to burst. They’ve now been hoping for years, and it still hasn’t.
Most of my friends, also in their twenties, have completely lost hope of buying a house. This is to the point they’re past their frustrations and they’ve accepted it as their reality. To them buying a house in Auckland is just impossible.
That’s what I thought too. Without meaning to sound ungrateful, I do not come from a rich family, and since high school I’ve funded the things I need. So for me, buying a house has pretty much been out of reach as it was something I have to do without any starting funds from family or anything as such.
In August last year, my landlord decided to sell the house we were flatting. For weeks, I was looking for a place to rent with my partner, Josh. But with the high housing demand, renting a place is very competitive. You’d be very lucky to find a decent place for a good price. With little options and the pressure of soon becoming homeless, we became frustrated and decided to consider buying a house.
Fast forward to October, Josh and I sat in a crowded room, relieved but hearts still pounding. The almost unreal sound of applause rose from spectators and other bidders. The auctioneer said to us “Congratulations on your first home”. We bought a house!
So how…
I saved up.
Since I was in high school, I’ve always saved money. I would put away as much as I could from the little money I got from gifts (if any) and odd summer jobs.
Everything I purchased took a good amount of consideration. If it was luxury, I usually didn’t buy it. Mum would often tell me “Why are you so stingy? Just buy it if you want it”. Looking back, I’m glad I’ve been stingy.
I didn’t save up to one day buy a house. Having money put away made me feel secure. So the more I had saved up, the more secure I felt.
So years passed, I’d saved up a good amount, which I was able to put into the house deposit. But my savings alone was not enough. It was enough for a house deposit, but not in Auckland. This leads on to my next point.
I purchased with someone else.
Joining forces with Josh has been crucial for us being able to afford a house in this city. We basically joined our savings together, and now we are both home owners.
Young people I’ve heard of that were able to afford a house in Auckland either had help from parents or had purchased with someone else — a sibling, cousin or best friend.
Buying a house with someone else or even a couple of others definitely makes it easier to afford a house. This is as long as it is with a person you can trust and all owners have a good legal agreement.
I used KiwiSaver.
KiwiSaver is a New Zealand voluntary saving scheme. It is aimed for getting people to save up for their retirement. How it works is you put in a percentage of your pay into the scheme. KiwiSaver funds can only be accessed on your retirement, if you‘re experiencing financial struggle, or if you are buying your first home.
What is good about it is, employers are required to put in a contribution and if you’re aged 18 or over, the government will also contribute 50% of the amount you put into the scheme. So basically, you get free money for saving.
After years of being on KiwiSaver, I was able to access $10,000 to put into the house deposit. So this has also been a big help.
If you have some form of saving schemes where you live, definitely consider it. After a while you won’t even feel the money coming out of your pay, but eventually you’ll be surprised with how much you’ve actually saved up. Just make sure you consider any risks involved and your possible future circumstances.
I did not wait for ‘the right time’.
What also contributed to us buying a house in Auckland is just by taking the plunge. We didn’t wait for life to be better or the property market to burst, which in my opinion could deflate but not at all burst, we just did it.
As said by many real estate specialists “Don’t wait to buy a property, buy a property and wait”. It is better to invest your money now and wait for it to grow than wait for any growth without having an investment.
If you can afford a deposit, just go for it.
I compromised.
Now don’t get me wrong, I did not buy a mansion in the inner suburbs of Auckland Central. When we first started looking at houses, we searched around the area we were already flatting. It wasn’t inner Auckland Central, but it was a somewhat convenient location if you work in the city. We could have purchased from this location, but not for anything decent.
As much as we wanted to buy a house, we also wanted to get a good investment. So we researched and thought about it and realised that we’d get more bang for our buck and a better investment if we compromise and look just a little further away for a slightly bigger house with a decent piece of land. In the end, we got a 3 bedroom, stand-alone, freehold house with nearly 700m2 of land. Not too bad, right.
With that being said, consider how far you could compromise. You don’t want to buy a lemon, but you also need to identify your boundaries to allow you to buy a home you can afford.
Good luck!