The new year is upon us! A couple of weeks in, some of us might already be having second thoughts about those challenging gym and diet New Year Resolutions we set.
But 2023 has more opportunity to achieve our financial goals than any previous year in recent memory.
Of course, financial goals are similar to health goals in that they don’t happen automatically without some level of effort on your part.
If part of your wish list is to buy a home or an investment property at some stage, the message from the experts is clear: There is no time like the present.
“Now is a really good time – we might not see a housing market like this for another decade,” said Debbie Roberts, owner and Financial Adviser at Property Apprentice.
“The opportunities that are there right now, we might not have again for another ten years or so. The last time we saw this sort of market was in the global financial crisis and there were some amazing deals that were purchased then.”
Much has been made in the news about rising interest rates and falling house prices, the OCR changes and the cost of living crisis. It’s a tough time for many of us but it is all a normal stage of the property cycle and an ideal time to get onto the ladder.
“At the moment, the buyers have all the power. There’s a lot of competition from sellers trying to attract the attention of a smaller number of purchasers,” explained Roberts.
“The biggest challenge in today’s market is the ability to get lending. If you can get lending, you’ve got your choice of property and you can take your time with negotiations. It’s a lot less stressful to purchase in a market like this.”
This opportunity won’t last long, however. Some people will be waiting for the turning point when house prices get as low as they’re possibly going to go – but by that stage it will very likely be too late.
“We could be in a period as early as mid-year when it’s still a buyers’ market but interest rates are lower again. The problem with waiting for that is that everyone is waiting for that – when bank lending criteria gets easier, there’ll be more buyers entering the market – so you’ll miss out on the opportunities that are there now,” said Roberts.
“I think the best purchasing opportunities are going to be from now through until the end of the first quarter. If you’ve got a pre-approval now, you’ve almost won already.”
Getting pre-approval from a lender means having a deposit ready – so how much do you need? Generally it’s 20 percent of the home’s value, but you may qualify to purchase a home with as little as a 5 percent deposit. The best part is your deposit doesn’t necessarily need to come purely from personal savings. For first home buyers, there are several options that can make it easier:
1. KiwiSaver withdrawal
If you’ve been a member of KiwiSaver for at least three years, you may be able to withdraw almost all of your KiwiSaver funds to put towards your first home deposit. You may even qualify to withdraw your KiwiSaver if you have previously owned a home, although conditions apply.
2. First Home Grant
If you’ve been contributing to KiwiSaver for at least three years (or more) and plan to live in your new house for at least six months, you may qualify for a First Home Grant of up to $10,000 for a new build or land to build on to top up your deposit. If you have a partner who is purchasing with you and you both qualify, that could total up to $20,000 to help boost your deposit amount. To reach this maximum amount, you each must have contributed for five years and purchase a new build. For an existing home, you can get $1,000 for each of the 3 (or more) years you’ve contributed. Find out more about the Frist Home Grant here.
3. First Home Loan
These are available through selected lenders only, but can allow you to purchase your first home with as little as 5 percent deposit. The banks offering this product include Westpac, SBS Bank, The Co-operative Bank, Kiwibank, NZCU, NBS, and NZHL.
4. Equity/Cash Gift
You may have a family member who could help you with your deposit (The Bank of Mum and Dad). This doesn’t necessarily need to be cash, it could be by using available equity in a property they own.
5. Shared ownership
You may be able to join forces with family/friends to purchase a property together. In these cases it’s important to have a legal document signed by all parties before the purchase that lays out all the what-ifs, but it can be a great way for many Kiwis to get on the ladder who may not have been able to otherwise.
Organising all that can be a lot to deal with. Indeed, buying a house is for many of us the biggest expense we’re ever going to face – but it’s important to get past the uneasiness that may make us feel.
“I think more people stress out about the deals they pass on than the houses they purchase,” said Roberts.
“You know, hindsight is always 20/20. You might worry when purchasing a house but as long as you’ve purchased a property that fits your financial position, you’re much less likely to regret that decision afterwards. But if you walk away from a deal just because you got nervous, those are the ones where buyers quite often look back and go, ‘Oh, I wish we’d bought that’.”
What is right for everyone differs greatly depending on their own unique financial situation. Property investing could be the best way for you to get ahead financially, but only if you purchase properties that fit your financial position and also your long-term goals.
Property Apprentice offers financial advice, coaching support and education for home buyers and investors without any conflict of interest because they don’t actually sell property.
Roberts runs free training sessions about how to improve your financial position through property, both live online and in person in Ellerslie, Auckland. You can register via the Property Apprentice website or check out the regular, free updates about the property market delivered in the Property Apprentice Podcast, available through all major podcast providers and YouTube.
This article is general information only and should not be taken as being individual financial advice.
Debbie Roberts – Financial Adviser, New Zealand Certificate in Financial Services (Level 5) [Version 2], (FSP Number: FSP221305) for Property Advice Group Limited T/A Property Apprentice (FSP Number: FSP157564)
Article created in partnership with Property Apprentice.