Does 'affordable' housing exist in Auckland? Yes, it does

Rents are climbing, the housing crisis is well-entrenched, and the bubble seems like it's never going to pop.

And every day, a new article emerges about the Auckland property market and its impossibility to break into.

What is true is that the quarter-acre dream is over. But there are alternatives, and we've found them.

Under Auckland Council's housing accord, an affordable home comes in at $650,000.

So, without making comment on how 'affordable' this limit is, for the sake of this article we set $650,000 as the top of our budget.

Here's what we came up with.

Relocating a house is probably your best hope
Relocating a house is probably your best hope Photo credit: Image - Getty

Relocate a house


"I'd say this is the only way to get a house in Auckland for $650,000." So says Dave Wilson, the general manager of The Relocatable House Co.

"You could get a piece of land in Auckland for $450,000," says Wilson. "If you relocate a simple 100m three-bedroom house, all inclusive, for $150,000, the biggest factor is your land, and you still come in under budget."

Here's how it works - buy a piece of dirt, find a house that's no longer wanted, chuck it on the back of a truck, and put it down where you want it.

"A young family, investing sweat equity - that's using your evenings and weekends to DIY it - would get a huge return on this," he says.

The first piece of the puzzle is the land - finding land in Auckland for the right price. 

"Everyone's a minor developer now," says Wilson. "You can split a property into smaller ones, so land is becoming available all the time."

Then you get an assessment of that land - a site report that covers all the basics like consents, council rules, your footprint allowance, what services such as electricity and sewerage are needed, and where your stormwater is connected. As a package, that research will cost about $900, and will save headaches down the line.

"Now you know what you're dealing with, and you can then work out what your total project is going to cost. You'll know right at the beginning where that $650,000 will go."

Next, you need building consent. That's an application to the council and it's going to take a minimum of 20 working days to turn around, but could take up to a few months.

Then, buy a house. Shopping around reveals unwanted houses vary widely - from $15,000 for a smart two-bedroom brick and tile to $75,000 for a Westmere bungalow.

The overall cost will be impacted by the size of your dwelling (does it need cutting in two and reassembling?), the style (bricks will need to be removed then reclad once in place), and how far you're moving it.

It isn't the simplest route into home-ownership, but Mr Wilson says it doesn't have to be complicated.

"Look for established land," he says. "Perhaps a site within a suburb that might have had a house in the middle. Then buy what's known as a 'plug and play' - a simple rectangular house that's well-maintained and appointed. Move it, plug it in, and it's ready to go."

Beautiful Rakino island - could you make it work?
Beautiful Rakino island - could you make it work? Photo credit: Image - fIle

Move to an island


In Auckland's shining Gulf lie a number of island getaways, all within the limits of the Auckland Region. Options include Waiheke (too expensive), Great Barrier (too far), and Rakino (just right).

Rakino has an area of just 1.5 square kilometres, a population that hovers around 18, and property prices that come in at less than half the Auckland average. There's also literally nothing on the island to spend your money on. Could investing on this low-lying island be the answer?

Rakino local Josh McCann moved to the island two and a half years ago, and says the isolation from commerce can put people off.

"In Auckland you walk past a cafe 10 times a day - there's always a way to spend money. Here, there are no opportunities to spend money. You can't even purchase water. You have to bring everything with you. It's not for everyone." 

With only around 100 dwellings on the island, there aren't always a tonne of options - currently you could pick up a sweet one-bedroom bach with fruit trees and 800 square metres of space for $365,000 or a well-maintained three-bedroom family home with sleepout and views to the Coromandel for $575,000.

It's not strictly commutable - ferries cost $56 return, and travel to and from downtown Auckland only every couple of days - but if the boss allows you to work remotely a few days a week, this could be doable. If you're up to it, a kayak trip to the city would take you 2-3 hours. 

Mobile reception can be patchy, but the internet works fine.

Ray White property agent Stephen Wong looks after 80 percent of Rakino's property sales, and says he has had customers try to commute to Auckland from Rakino. 

"Commuting is just too hard," he says. "It didn't work out."

That said, there is work on the island - local construction workers are booked up for the next two years.  

Buy a leasehold


As a rule of thumb, if it's low cost, it's high risk.

Under a leasehold, you own the building but not the land beneath it. Each year you pay rent for that land to the leaseholder (in Auckland this is typically a council or a church). 

Rents are decided by the value of the property - and valuations can be done privately - which means at the end of a lease period, it's possible to get a nasty surprise as your lease climbs - potentially by tens of thousands of dollars. 

Donna Watts, property agent for Ray White in Kohimarama, says leaseholds are probably not the right step for young people. 

"Leaseholds might be 21 years, and then no one knows what the ground rent will be after that term," she says. 

"A private valuation is done, and then a percentage of the land value is charged as the lease. But it's an unknown, so the banks won't lend on it - young people will struggle to get finance."

She says potentially you could rent a room to cover the cost of the lease, but sellers could struggle to shift the property as the lease term gets close to expiration.

"They're really more for retirees who don't care about capital gains," she says. "Young people will have to go south, just make steps like we did."

Instead, we're going north.

Sky-high living - apartments could be a good bet
Sky-high living - apartments could be a good bet Photo credit: Image - Getty

Buy an apartment


It may be time to get over our aversion to high-density living. 

Apartments are secure, low maintenance, and more affordable than a house. So why aren't they a more popular option?

For one, they're harder to raise a deposit for - banks don't see apartments as such a secure investment so you're going to need to find 30 percent of the property's value to put down.

For another, you may find yourself on a leasehold - meaning  you will lease a share of the land from the leaseholder. That means you're not going to benefit from rising land values, which in Auckland, is significant. On the flip side, it'll be cheaper to buy.

Other issues to consider include the cost of your body corporate fee and noisy neighbours.

But once you've done your due diligence and got the bank onboard, apartments can make your money go much further - with space, amenities, views and convenience.

Trade Me abounds with decent options: take on this massive five-bed apartment in Waterview for $495,000, or live in a stylish Parnell two-bed for less than $400,000.

Get a shared mortgage


So you can't afford a house - how about half a house?

Doubling the buying power could ultimately more than double your floor space.

Mortgage lenders will allow you to split a property not just in the traditional way with a partner, but between friends, siblings, or two couples. 

Glenn Stevenson, ANZ's head of mortgages, says it is possible to take out separate loans on a property (which together are still considered to make up one mortgage), but borrowers must be able to secure the other party's loan.

That means that if your friend defaults, you'll be responsible for their end of the bargain.

When it comes time to sell, either both parties need to agree on the right timing, or one party would need to find enough money to buy out the other.

These agreements are not common, says Mr Stevenson, and anyone interested in pursuing the split property option should consider their relationship with the other party seriously first.

But if you do have the right relationship with the right co-investor, the opportunities are considerable.

With a budget for $400,000, you could go in on a decent three-bedroom two-bathroom pad in Mount Roskill

And if you reckon you get the deposit for our $650,000 budget, why not buy a sweet as four-bedroom Kingsland villa for $1.3 million?

Small but perfectly formed - the tiny home industry is growing
Small but perfectly formed - the tiny home industry is growing Photo credit: Image - IQ Container Homes

Get a tiny house


In the increasingly fashionable world of small homes, less is always more.

"Small spaces are not a compromise," says Brenda Kelly, director of IQ Container Homes. 

"Small homes are easy to keep warm, cheap to run. We need to challenge that Kiwi mindset of the quarter-acre dream and a white picket fence."

Ms Kelly says that as a nation we have one of highest average house sizes in the world - about 200 square metres in New Zealand compared to just 76 square metres in the UK - but, she says: "People need to get it out of their heads that they need a large home." 

Her company produces prefab container units that can be combined to create the home you want - $160,000 will buy you a 45 square metre two-bedroom home. $240,000 gets you a three- to four-bedroom with 90 square metres of floor space. 

Insulated, eco-friendly and affordable, she says that as couples put off having kids, more people live alone and baby boomers downsize, demand for small homes is increasing.

"I am living evidence that you can do this for less than $650,000. My house is a small two-bed but sufficient for my needs. My running costs are next to nothing, and that frees up your finances for holidays and the rest."

Ms Kelly pays about $2 a month for water bills, and an average of $20 a month for power.

Other benefits of container homes include their environmental benefits (all homes are fitted with solar systems and rainwater harvesting), short lead times and their ability to be fitted on difficult sites.

"The land I bought had been on the market for a while, because it's quite steep. But pile foundations mean the slope isn't an issue."

She says overall, this is about changing our expectations: "You don't need a spare room for the grandkids - be smarter about space."