Advice for young property buyers

Whether you’re looking to purchase your first home or your first investment property, if you’re a young property buyer, it can be daunting to navigate today’s market. Barfoot & Thompson Director Kiri Barfoot dispenses her advice.

Save, save, and save some more

There’s no getting around the fact that, in order to purchase your first property, you’ll need money in the bank. 

Saving up a home deposit can be the biggest obstacle for first property buyers. Studies, travel, and money spent on an active social life are obvious roadblocks to saving, but with rising house prices not corresponding to wage increases, what’s a young person to do?

“It’s important to remember that it has always been difficult to get your foot on the property ladder,” says Kiri Barfoot. “Instead of giving up, keep focused on your goals and consider your options.” 

Some ideas to help you save faster

  • Those who are fortunate to have the option of living with family while saving for a deposit could make the most of it. “It’s also becoming more common for parents to leverage the equity in their own homes to help their kids get on the ladder.”
  • Maximising your KiwiSaver contributions with a view to withdraw funds for your first homecan be another way to build up savings more quickly and automatically. You may also be eligible for the KiwiSaver HomeStart grant
  • You may be eligible for the Welcome Home Loan, which means you’ll only need a 10% deposit. Check their websitefor more details and eligibility criteria. 
  • It may seem obvious, but cutting back on non-essential spending is necessary to reach your goals faster. Saving even small amounts can add up over time, and most importantly, will help build the savings habit and mindset. 

    “Property investment is an expensive pursuit and some sacrifices will need to be made. This doesn’t have to mean no more fun, but you’ll have to consider your priorities and savings goals before purchasing something non-essential – only you can decide whether something is worth it to you.”

Think outside the box

If you’ve managed to save a deposit, the next step is to find a property you can afford.

As a young property buyer, it helps to look beyond the ‘traditional’ standalone house on a quarter-acre and expand your search to include apartments, units, terraced houses, multi-family properties and new builds. 

“Remember that your first property isn’t necessarily your forever home, but a good way to build equity that you can use for your next property,” says Kiri. 

You could also consider getting a flatmate or two, or look into temporary options such as Airbnb or boarding overseas students. While it can be a sacrifice to give up some privacy, the rental income can go towards covering costs such as the mortgage, utilities bills, or property maintenance. 

Look for opportunities

Keep an open mind and be prepared to look at neighbourhoods that aren’t so trendy, or properties that are rough around the edges. “If you look around, there are still opportunities to be had for entry-level properties,” says Kiri. Areas that are close to public transport hubs or new motorways (both new and proposed) are great places to look. 

“It pays to not be a snob. In the 1960s, people turned down Herne Bay properties as they had to drive through Ponsonby to get there. Now look at both suburbs! More recently, look at the huge transformation that Glen Innes has undergone. You never know which suburb will be the next up-and-comer.” 

With the recent easing of loan-to-value restrictions by the Reserve Bank of New Zealand, this presents an opportunity for more young people to get their foot on the ladder. Talk to your bank about what’s possible – you won’t know unless you ask.

Learn more about rental yields in Auckland suburbs

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