Money – Ditch the pay TV and start saving?

The news and just about every publication lately seems to be just chocka block full of articles about the Auckland property market, first home buyers, and case studies of those who have been able to buy and those who can’t. I thought I would add my two cents worth.

One of these articles which caught my attention was about an Auckland mortgage advisor who gave some straight shooting advice to a would-be first home buyer – “Ditch the Sky TV and start saving”. The article attracted a lot of attention and a large amount of comments both for and against the article. While many of the comments took the message out of context with replies such as, ‘Do you expect us not to have a life?’, and ‘Every week we save as much money as humanly possible, and have very little money for ourselves. Despite saving every possible dollar … we are still not able to keep up with rising house prices’.

What the advisor was trying to get across is the message that, quite simply, times have changed, house affordability is not what it used to be and that if you have the aspiration to own a home then you may have to change the way you manage your finances and adjust your expectations of what you can afford.

Every week I give out the same advice to would-be home owners – you need to ensure you have your finances in order and looking as good as possible to be able to qualify for a home loan these days. Times have changed; the responsible lending code introduced by the Government has put up more bureaucracy and hoops to jump through than ever before.

Buying your first house is not a one week exercise, but now requires a well thought out planning journey to get you over the home ownership line. It will take some sacrifices and it will involve some going without. However, for those prepared to take advice and stick to a plan, it will become reality.

Houses prices are driven purely by supply and demand. Over the past 10 years Auckland has had massive population growth and the supply of houses just hasn’t kept pace with demand, hence the double digit price increases we have seen across all areas. It doesn’t look like it’s going to slow down any time soon which will put more pressure on prices. Be aware though, that at some stage when supply meets that demand level, house prices will plateau and could even drop. I have seen this happen three times in the past 27 years, and yes, it will most likely happen again. This is where a good financial plan will come to the rescue and the house you buy now remains your home for good!