First Home Buyers in New Zealand


New Zealand has some of the most expensive residential property markets in the developed world, and this has been so for well over a decade now. Worst case of this is in the largest city in the country, but the problem was also serious in the other main centres and one or two provincial centres.

Hannah Torinet, professional mortgage broker

The real problem is that house building has not kept up with demand for many years now, and what houses are available for sale are being competed for by cashed-up investors and wealthy homeowners. This has caused the houses in these markets to be simply unaffordable for the vast majority of first home buyers.

The problem has been tinkered with by successive governments and the reserve bank, but the fundamental problem of too much demand for insufficient houses is still very much embedded in New Zealand. The banks and mortgage brokers Waikato have been complicit in this problem in the sense that they have aided the funding of the escalating housing market. If borrowing conditions had been much tighter over the past decade then this would have suppressed the demand somewhat and kept prices lower.

Instead the population has steadily increased, largely due to immigration enabled by compliant government policies, and house prices have continued to rise due to the shortage of houses and the ready availability of finance enabled by banks and mortgage brokers.

For mortgage brokers in Wellington this has been a very good period because as finance becomes tighter and banks requirements become more onerous then more people require a mortgage broker to help them through the minefield of an application. Worryingly the average mortgage now for the first time buyer is probably 3 times what it was 20 years ago, but the average salary in NZ is only about 50% higher, and a whole generation of new home owners are struggling under a massive amount of mortgage debt. This presents a real problem for the new government which intends to build a massive number of new affordable homes over the next 10 years. The very last thing they would want to do is to flood the market and help to drive down property prices, as this would most likely cause a large number of home owners to go into negative equity. This would be catastrophic for them and for the New Zealand economy.

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