The Government needs to change the rules to help first-home buyers enter Dunedin’s “absolutely mental” property market, a frustrated house hunter says.
Alison Conroy, of Green Island, said she and her partner had been trying to buy their first home since early 2018.
The couple got a pre-approved loan from their bank after securing a 10% deposit of savings, gifts from family and potential KiwiSaver withdrawals.
The search for a first home had been fruitless because the residential property market in Dunedin had risen sharply, Ms Conroy said.
The couple had made three unsuccessful offers on homes and all of them had sold for more than $450,000.
“It’s so frustrating.”
The couple are looking to buy a home for less than the Dunedin price cap of $400,000, to be jointly eligible for the Government’s first-home grant of up to $10,000 and a first-home loan underwritten by Crown agency Kainga Ora.
But entry-level homes were selling for more than $400,000, much more than the rating valuations.
The pair said they lacked the skills required to buy a “fixer-upper” so were searching for a simple three-bedroom home in a sunny part of the city.
They want the cap lifted to $500,000, which would allow them to make unconditional offers on a home.
“A condition our bank needs is to get a registered valuation and it screws us over every time, because someone beats us with an unconditional offer.”
Ms Conroy questioned why Christchurch had a $500,000 price cap when houses there were cheaper than in Dunedin.
The latest QV data reveals the average value of a residential house in Dunedin in January 2020 was $527,101 – up 20.8% on the same time last year.
The average value in Christchurch at the same time was $510,575 – up 2.7% on last year.
Saving to buy a home was difficult because about a third of their combined income was spent on rent in Dunedin.
She works in customer service and her partner in early childhood education.
A Ministry of Housing and Urban Development spokesman said housing affordability was an issue across many parts of New Zealand including Dunedin.
“Not every home can be purchased using the grant, this is because the grant is in place to support first-home buyers to purchase modestly priced houses,” the spokesman said.
The price cap for existing Dunedin homes was raised from $350,000 to $400,000 in 2016.
The grant’s settings were reviewed periodically, he said.
“While there is no immediate plan to review the settings of the grant, the ministry regularly provides information to the Minister of Housing on the grant to ensure that the policy remains effective over time.”
A Kainga Ora spokesman said 88 grants were paid in Dunedin for the first quarter this year.
In December last year, Ms Conroy wrote to her local member of parliament, Dunedin North MP David Clark, asking for the price cap for Dunedin to be lifted to $500,000.
Dr Clark referred her to Kainga Ora.
When The Star asked Dr Clark about the concerns Ms Conroy raised, he provided a similar statement to the ministry.
Minister of Housing Megan Woods, when asked if the price cap for Dunedin was fair, said “consideration for making any changes to the first-home grant settings would need to be done alongside the Government’s other priorities for addressing the issues with housing and urban development that New Zealand faces”.
Total Realty Dunedin sales consultant Mark Ford said Dunedin’s property market remained “buoyant” and had not slowed down in the wake of Covid-19.
“It’s as strong as it was prior to Covid. This time of year it should be a lot slower than what it is – it’s being fuelled by first-home buyers but finding anything cheaper than $400,000 is like gold dust .. I do feel sorry for first-home buyers – it’s a problem.”
Most properties in Dunedin sold within a fortnight of being listed, he said.
considering we’ve just come out of Covid. I’ve sold eight properties since Level 2.”