First-home buyers get on Auckland property ladder with pre-auction offer

The couple said most of the houses they looked at sold by auction and were over their budget.
The couple said most of the houses they looked at sold by auction and were over their budget. Photo credit: Supplied.

After missing out on several auctions, an Auckland couple says a pre-auction offer is what got them out of renting and into their first home.

Although the property market is "overwhelming" for first-home buyers, they put their success down to knuckling down on saving, being prepared to compromise, and a helpful team.

It comes as the rate of house price growth makes it tough for Kiwis to get onto the property ladder. July REINZ data shows the national median selling price is $826,000, up 25.2 percent year-on-year. The national median price first-home buyer paid in June 2021 was $685,275 - around $150,000 more than the same time last year, CoreLogic data shows.

Having got their finance pre-approved by a broker in March, Kirti, who works in the IT industry and his wife, a beauty therapist, had their sights set on buying a first-home in Mt Roskill where they'd lived for three years. 

After seeing two-bedroom units sell "for above $850,000" and houses sell at auction for "$250,000 plus over registered valuation", they decided to look further afield in West Auckland.

"Most of the houses were over my budget and sold by auction… it was hard to find [a] price by negotiation property," Kirti explained.

After they lost out on an auction in Mt Roskill, the real estate agent encouraged them to make a pre-auction offer on a four-bedroom property in New Lynn, a unit title property on just over 400 square metres of land, including a double garage.

"With their help, we made a decision to place a pre-auction offer… we paid in the mid $800,000s," Kirti said.

Their deposit, 10 percent of the purchase price, was made up of $40,000 of existing joint savings, KiwiSaver, and a few months of hard saving.  As the home didn't fall within the price cap of $625,000 for Auckland (existing homes), they were unable to use the First Home Grant.

Saving the remainder of their deposit required some "tough decisions", saying they lived "like broke". This got them into the habit of saving a large portion of their joint monthly income.

"We decided that only one person would pay all the bills (rent, utilities, food, etc.) and [the other would] save their entire salary," Kirti explained.

"I haven't wasted a single dollar in the past eight months."

Having felt "overwhelmed" by the number of buyers compared to homes for sale, their advice to other first-home buyers is to get a good team of professionals behind them.

"The best thing that happened to me was having a helpful banker, lawyer and a humble real estate agent… the team has given [me] a lot of confidence," Kirti said.

Based on REINZ July figures, the median selling price for properties in New Lynn was $901,000 - up 7.3 percent from $840,000 in July 2020. By comparison, the median selling price in the Auckland region was $1,175,000, up 28 percent year-on-year. 

Under a unit title, the purchaser owns a defined part of the building, and shares ownership of the common areas (e.g. the entrance and garden).

As common areas are shared, REINZ chief executive Jen Baird confirmed unit title properties (along with cross-lease) can be less expensive to buy than freehold properties. 

As with any purchase, it's important for buyers to do their due diligence - and consider whether it suits their needs.

"A positive of a unit title property is that maintenance of the apartment is usually undertaken by the Body Corporate and the cost of living is usually less in relation to utilities such as electricity -  but you'll need to budget for the Body Corporate levies," Baird said.

Amid forecasts of an Official Cash Rate rise, those looking to buy are also advised to double check what they're willing to pay matches their budget, bearing in mind interest rates could rise over the coming months.