First rung: Auckland couple says buying first home 'feels surreal' after boarding for two years to save money

Auckland couple Queenie and Gagandeep boarded with a family for two years to help save a first-home deposit.
Auckland couple Queenie and Gagandeep boarded with a family for two years to help save a first-home deposit. Photo credit: Supplied.

After boarding with another family for two years and one year of visiting crowded open homes, an Auckland couple says the prospect of finally being homeowners "feels surreal".

It comes as house prices continue to defy predictions, with chief executive Vanessa Taylor confirming the national mean asking price rose $89,575 year-on-year in February, up 12.7 percent to $796,789

A CoreLogic February housing affordability report shows in the last quarter of 2020, house prices surged 6.1 percent, while Infometrics figures show incomes rose just 1.3 percent. Nationally, the house price value-to-income ratio is at the highest level since late 2016, a 17-year record.

As her parents have never owned a house and as prices continued to skyrocket, Queenie Mikaere felt resigned to a life of renting. But it was husband Gagandeep who insisted they try to become homeowners.

"Now that we have, it feels feels like all the struggles we went through, house viewings with 30 other buyers, all the failed offers and different brokers we went through were all worth it," Queenie says.

Their 20 percent deposit consisted of cash savings, $42,000 from the KiwiSaver first home withdrawal and a gift from Gagandeep's parents.  The couple saved for two years, renting a room with an en-suite in a family home to cut down rent costs. 

"We opened an account in a different bank just for savings only...every week we would budget for our weekly bills and transfer the rest straight into the savings account," Queenie explained.

Husband Gagandeep picks up overtime shifts whenever he can and drivers for Uber on his days off.  

"We haven't travelled anywhere for the last few years, and unnecessary shopping has been minimal."

After a year looking at houses within the $750,000 to $850,000 price-range, the couple bought a freestanding five-bedroom, two bathroom home in Papakura with an end-of-March settlement date. After seeing most of the three-bedroom houses in their price-range were units or new builds with one carpark and a small amount of land, they decided to push their budget out "a little more".

"[One of] the biggest challenges was finding places that ticked all our boxes of what we wanted in a house...other challenges were trying to view a house that was advertised online as fast as possible so that we could quickly get an offer in," Queenie explains. 

After seeing the house online, the couple was told that someone had already made an offer. But while looking at other homes they persisted, calling the real estate agent to check if it had sold and expressing interest if the offer fell through. When it did, they were contacted straight away.

"We found that becoming friendly with agents and letting them know we were serious about buying a house was handy, as they would email or call us if similar properties came up," Queenie adds.

Five tips for saving a first home deposit

Based on research undertaken among 1400 first-home buyers using the 'First home coach' app, founder Matt Taylor tells Newshub that the average deposit saved is $50,000. Just 15 percent had saved $100,000 or more.

Three-quarters of app users intend to buy a free-standing, three or four-bedroom home and the majority were in the $550,000 to $700,000 price-range - an expectation Taylor says doesn't match the realities of a hot housing market.

He shares the following five tips for people wanting to save a first home deposit:

1. Get KiwiSaver

As employers and the Government contribute alongside members, KiwiSaver is an ideal way to build a deposit nest egg.  The first-home withdrawal allows members of at least three years to withdraw most of their savings to buy a first home. 

2. Cut back on spending

Banks are looking harder than ever at not only the amount of spending but also the 'type' of spending, for example, prioritising luxuries over fixed expenses.

"Keep in mind lenders will be scrutinising your previous three-to-six months' of spending when you apply for a mortgage."

3. Have a savings plan and set "micro-goals" towards it

To keep motivation high and make progress more visible, break the first-home deposit goal down into fortnightly or monthly "micro-goals".

"A mortgage adviser can help you understand your borrowing power and how any changes in lending policies could see you getting into your first home sooner."

4. Understand what Government help is available

Many first-home buyers confused KiwiSaver with the First Home Grant and/or First Home Loan.

"Both the [First Home] Grant and the [First Home] loan could help, with up to $20,000  available for a couple buying a new home, the loan being [currently] the only product in the market catering for those with a 5 percent deposit."

Income caps ($85,000 or $130,000 for two buyers, before tax) and regional house price caps (e.g. up to $650,000 for Auckland), apply.  More information can be found here.

5. List out 'wants', 'likes' and 'non-negotiables'

As a first home is a stepping stone, it's unlikely to tick all the boxes. 

Sit down and group desired features of a first home into three buckets: wants, likes and non-negotiables.

"The idea is that you regularly revisit this list as you progress your house hunt: you'll soon get a good idea of what's important and what's not and it should ultimately be used as a sense check when you think you have found 'the one'," Taylor adds.