On the heels of my earlier post on housing affordability comes some rather startling news in the New Zealand Herald.
Seems the gap is fast narrowing between the cost of renting and servicing a mortgage, result being many tenants are deciding they may as jolly well become homeowners instead:
Tenants squeezed by double-digit rental increases are turning to buying their own home as the cost of owning and renting narrows – even though New Zealand houses are rated some of the most unaffordable in the world.
Industry commentators have noted a fresh flurry of interest among first-time buyers, which they put down to rising rents, an improving job market and appealing interest rates.
According to the latest Roost Rent or Buy report, it took the typical Kiwi first-buyer household just slightly more money to service a mortgage on a bottom-range house than it costs to pay a median rent.
And in parts of Auckland city, owing to their rental crisis, it is in fact cheaper to give your money to a lender than a landlord. At that point, if you’ve got the 20 percent deposit, why wouldn’t you?
As I stated previously, low interest rates are making the ‘cheaper end’ of the housing market more and more appealing to first homebuyers. Over at interest.co.nz, who commission the monthly Roost Home Loan Affordability report, they found that, for those in the 25-29 age group, it takes 44.3% of one median income to pay the mortgage on a lower-quartile priced house. This is down from 45.5% in January. If this seems like modest movement then consider this: four years ago a similar house soaked up 70.9% of your median income.
Granted, it’s not fun and games out there for everyone – but for those renters who are thinking about becoming homeowners this is the ideal time. Seize the day!