A Dunedin couple who have just snapped up their first home say they were amazed how much they could save for their 10 percent deposit once they'd paid off previous debt.
Around three years ago, Dunedin couple Marge and Johann went to see a mortgage broker - and received a "hard no".
In August 2020, they decided to discuss their financial situation again. Their plan of attack involved paying off credit cards and loans, which took around eight months.
Debt-free from April, the couple switched gears, putting all their spare money into savings.
"We lived like peasants… sold the love of our lives (two guitars and a piano)," Marge said.
"It still amazes me how much we managed to save once our income did not need to pay off debt."
By June, they'd scraped together around $12,000 in joint personal savings, which along with the KiwiSaver first-home withdrawal, was used to buy their first home.
A "multi-offer" situation saw them buy a freestanding three-bedroom home in Lookout Point, Dunedin for just over $600,000.
"The deadline was supposed to be for another two weeks but someone had put in an earlier offer… [the] agent rang told me of the other offer and asked if we wanted to put in an offer as well," Marge explained.
Due to COVID-19 alert level 4 restrictions, their settlement date was delayed until September. Having recently made the leap into home ownership, the couples' advice to other first-home buyers is not to feel under pressure to buy.
"For years, we have been dodging the neverending questions of, 'why don’t you have your own house yet', or 'when are you buying a house'... buy when you are ready," Marge added.
They also suggest finding a helpful mortgage broker who can hand-hold through the process, looking for an opportunity to put in an earlier offer and to "never get too emotionally attached".
"Every time we lost an offer, we took a big breath and moved on… it gave us time to save some more while waiting for another property to come up, making our buying power stronger."
Of six cities across New Zealand, Dunedin is the third least affordable city after Tauranga and Auckland, current CoreLogic figures show*.
CoreLogic head of research Nick Goodall said along with the rest of the country, Dunedin had seen upward pressure on prices, noting employment in the city grew 1.6 percent over the last year.
The CoreLogic House Price Index shows average property values in Dunedin City reached $672,000 at the end of September, an annual increase of 22.8 percent.
"The share of sales to first home buyers, other owner-occupiers (movers) and investors is relatively even, which has no doubt led to strong competition which translates into upward pressure on prices," Goodall said.
Following a 46 percent increase ($213,000) in just over two years, CoreLogic September figures showing growth dropped back to zero.
"Dunedin is one of the markets we're watching to see if a slowdown is occurring...it's seen such strong growth...affordability is really starting to stretch people," Goodall added.
*CoreLogic housing affordability figures are based on value-to-income ratio, share of income required for mortgage repayments and years to save a deposit.