2016 has been quite a year in Auckland property. There's been groundbreaking progress with combating skyrocketing prices, which may serve to make first home buyer's lives just a little easier in the future.
There's still so much value in Auckland property, and 2017 is looking increasingly positive for first home buyers. Let's have a closer look at the year that's been to get a better picture of where we are, and what next year will be like for fledgling property purchasers.
Median house values are at a record high
The media trumpeted it from the rooftops and first home buyers decried the end of days in September this year. Auckland's median house value had finally hit $1 million, and the people were not happy.
Fast forward to the end of the year and the rate of house price increases have slowed down, leaving the QV reported median value at $1,051,387. That's a value increase of just under 13 per cent for the year, which seems massive, but pales in comparison to last year's 24.4 per cent increase.
With the rate of increase slowing down, there's still pockets of affordability around the city for first home buyers. Barfoot and Thompson's November suburb report puts three bedroom houses in Wellsford at under $500,000 on average, while Otara, Clendon Park and others sit at under $550,000.
Sacrifices are certainly necessary (number of bedrooms, location, size etc), but despite this $1 million median, even first home buyers can still afford to get onto the property ladder with the right advice.
The Unitary Plan may help ease the pain for first home buyers
If one thing is to blame for Auckland property's million dollar median, it's a lack of supply and a surplus of demand.
If one thing is to blame for Auckland property's million dollar median, it's a lack of supply and a surplus of demand. In July this year, a vision for Auckland's future was set out in a draft for the Auckland Unitary Plan, purposed to help balance the scales in the city.
The document plans to enable dwelling supply to exceed demand by 2041, as well as rezoning areas for densification and focusing on building more affordable housing.
We're still waiting to see what the real effects of this change will be, but it's likely that in the near future we'll start seeing an Auckland that's a better city for first home buyers.
The Reserve Bank has lent a hand
In 2016 the Reserve Bank (RBNZ) has made their presence felt through both the Official Cash Rate (OCR) drops and the instatement of harsher LVR speed limits. At the beginning of the year, the OCR sat at 2.5 per cent, but fast forward to today and it's sitting at a record low of 1.75 per cent.
The cost of borrowing to buy property has dropped as a result, a change that may certainly make it easier for first home buyers to afford their mortgages.
The RBNZ has also introduced harsher LVR speed limits earlier this year, mandating that no less than 5 per cent of lending be to lenders with an LVR of of over 60/40. These limits have been effective in limiting investor lending according to RBNZ data, and may help to steady increasing property values.
This change is another positive for first home buyers, as it may serve to decrease the competition they face on the market, and make it possible for them to find more affordable homes.
Special housing areas
In 2016 we've seen the rise of special housing areas – purposed for affordability. These new laws mandate that developments of over 14 dwellings or over must include a certain percentage of houses priced at a level that less established home buyers can afford.
For example, according to the Auckland Council, at Hobsonville point 20 per cent of dwellings are included and priced at or below $550,000.
While we certainly haven't seen a fix to the problem of affordability for first home buyers, we've seen some steps in the right direction over 2016. If you want to to get your first foot on the ladder, get in touch with an experienced mortgage broker here at Mortgage People. Our tailored advice and personalised services could be the ideal leg-up!