by Hayden Stanaway.
The latest BNZ/Real Estate Institute of New Zealand residential market survey notes that the real estate industry has seen a 42 percent rise in first home buyers appearing at open homes.
Is this relevant for home owners in Birkenhead and Northcote Point looking to sell their property? No… and yes.
To be honest, not a lot of first-home buyers purchase real estate in Birkenhead and Northcote Point. To be blunt, most of the homes in these suburbs are out of their price bracket.
Let’s look at it from the cold, hard commercial facts. Most first home buyers in Auckland are aged in their 20s/early 30s. Only a small percent of those first home buyers in that age bracket have gross household incomes say of around $135,000 – with one earner on around $60K per annum and the other on $75K.
With those figures, they can borrow somewhere close to $570,000 at a mortgage rate of six percent. Realistically, even with a $50,000 deposit, $620,000 doesn’t buy a lot in Birkenhead Point or Northcote Point.
So if you hear a real estate salesperson saying your $million+ home is perfect for first home buyers, do the math first, and assess that for yourself.
However, first home buyers are an important part of the greater real estate cycle, so having them active again is important for those selling their homes in Birkenhead Point and Northcote Point.
Why? Because the first home ‘owners’ in the likes of Birkdale, Albany Basin, Glenfield, and Sunny Nook are selling to the first home buyers.
Those first home owners are then becoming second home buyers, trading up to the likes of Forest Hill, Hillcrest, and Bayswater. Combined with rising income levels as their careers improve, those second home owners are then becoming third home buyers…. in the likes of Birkenhead, Chatswood, Coastal Beachaven and Northcote Point.
So having plenty of action in the first stanza of the domino-effect is critical for movement in the middle to high end of the market. The cliché about getting one foot on the property ladder is so true.
To regain full momentum in the residential property market, all price bands need to become more fluid. Activity requires both a ‘push’ and a ‘pull’ mechanism. First home buyers are the push segment of the market.
Conversely, those home owners in Birkenhead and Northcote Point thinking about selling, are the ‘pull’ factor – pulling up those to the upper price brackets. The more Birkenhead and Northcote Point homes listed for sale, the bigger the pull factor.
When push and pull matrices work simultaneously, the property market really begins to move, from a volume perspective. With mortgage interest rates at historic lows of around 5.2 percent, the push factor is running hot.
There are vendors who have already taken advantage of the pull dynamic over the recent winter months – realising that a lack of listings have played into their favour.
Contact the author
Hayden Stanaway is the general manager of residential sales for Bayleys on the North Shore.
Phone: 09 487 0720
Mobile: 021 916 400
Email: hayden.stanaway@bayleys.co.nz