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I was talking to a couple of wannabe first home buyers the other day and the conversation turned as it always does, to the subject of Auckland's increasing house prices and the affordability of those houses - especially for first timers.
What struck me most about both of these couples is that they were entirely realistic about their prospects, the kind of house they could buy, what suburbs it would most likely be in and their 5-year plan once in the house.
One of the couples was renting in Takapuna, one street back from the beach, shops, bars and cafés the area is famous for and they were totally happy about the fact that they would not be buying something nearby because they felt the average house price in Takapuna was beyond them.
At approximately $580,000 it's beyond many of us!
We joked about how there was no way they'd be buying one of the houses being built on The Block only 2 minutes away. Strangely enough, the number crunching I'd done for them meant they almost could, actually. Quite impressive when you think about it because those properties have CVs in the $700,000 category. I got a few raised eyebrows and naturally they were surprised (pleasantly so) but I got a firm and polite "no thanks".
Instead they told me their plan was to borrow way less than the bank would evidently lend them and buy something more modest.
They would look for something which had potential to be improved perhaps with minor renovations but nothing extensive - Something which was in need of maintenance but otherwise in good shape.
Tidy up the garden, paint the house, that sort of thing. They would also pay more than the minimum required on the mortgage to build equity.
Kids were also part of the plan and they felt strongly about paying more than the minimum because it would stand them in good stead for when one of their incomes dropped off for a 6-12 month period. To do all that meant buying something below the median price was key.
Their price bracket was more like $450,000 and they figured property on the North Shore west of the northern motorway would be where they'd most likely find a suitable house. Not a palace, but a start.
In the end they found themselves on the Whangaparaoa Peninsular in a house that matched the brief almost exactly (Mainlanders - Whangaparaoa is to the North Shore what Kaiapoi is to Christchurch).
If it sounds like a dream run that only the lucky few will attain it's not actually, we see these people most weeks. They are characterised as working couples (some have kids, some don't) in solid jobs who've saved a deposit and have also picked up on the Kiwisaver withdrawal at their disposal.
They've realised they are in no position to influence the market to a degree that would make houses more affordable for them. And although they might not like what is happening they accept the market for what it is and look forward to the possibility of getting some capital gain action too.
They understand very clearly that their first house is exactly that, a stepping stone to greater things and that loading up on debt right now might not be so wise.
Perhaps more importantly they've decided to assume responsibility over the only thing that will get them into a house - themselves.
Campbell Hastie is a mortgage broker from Auckland firm Go2Guys. Read more of his blogs here .