Help! How do I buy my first home in Wellington?

By Lance Shearman

Fear of missing out (FOMO) is real. Especially when there’s a one-day sale for those pair of shoes or that latest tech item, but your pay day is 24 hours away. But what if that item was in hot demand and in shockingly low supply, was going up in price by roughly $30k every month and it was one-of-a-kind with nothing else out there that compares? That’s what FOMO looks like in the Wellington property market right now. 

This is what a lot of people are currently experiencing when trying to purchase their first home in the capital. With low numbers of properties in the Wellington area, there is a state of FOMO that seems well justified. There are simply not enough properties being built. Plus, the ones that are being built are not being built fast enough. End result is that there are far too few properties coming on the market to buy. 

So, what good news exists out there for getting a property in what seems to be the most literal run out sale ever in Wellington?

1. You can purchase your first home with 10% deposit

If you have a pretty solid income (rough guide: banks may lend up to five times your income, depending on other debt or fixed expenses) then you may be in with a chance to purchase something at the prices they are going for. 

2. Family support

You are never too old to ask your parents for things, and they love it (I have no actual evidence that they do), but most parents would like to help out if they can. Sometimes we are just not sure how.  Parents can gift money to assist with your deposit, you can use a family property as security to assist with the deposit, or if all else fails, Mum and/or Dad could be a rental property that you tenant and buy off them later. 

3. Working from home? 

How about purchasing somewhere a little less central than busy Wellington? How about something more chilled up the coast? The prices in and around central Wellington are … well … climbing. If 2020 taught us anything, it was that, for many, working from home can be possible. Could this open up your options for getting on the housing ladder? 

Yes, living in and around Wellington has some very cool benefits. But with lower house prices further up the coast, some can have their cake and eat it too. A more relaxed lifestyle, with Wellington just down the road for all of its big city offerings.

4. Not using Kiwi Saver?

So, my last working-from-home idea, is not for you, how about you buy a rental investment up the coast or in another city instead, while renting for yourself in Wellington? If you do not need your KiwiSaver for deposit or would actually like to use all your KiwiSaver for your retirement, then there are opportunities to purchase a rental property instead. Now, the new LVR (deposit) rules have made this a little trickier at the moment, however, for some people this still works well with lower house prices around other parts of the country.

To conclude, I get it, it is tough out there with a lot of “offer fatigue” going on. If you are finding it a little tiring or would like to brainstorm solutions with someone, we at Velocity are more than happy to talk through your specific situation to see if we can help get you that must-have item of 2021!

Lance Shearman is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

‍

‍