Here's why first time home buyers do not really have any easier

OPINION: A growing number of people want to tell first-time home buyers to stop complaining about the difficulty of buying a home.

They point to low interest rates, government subsidies and programs like KiwiBuild and ask: what is the problem?

I admit that I am known to be one of them. Sorry about that.

Although these arguments sound good in theory, they fail in reality.

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Here's why.

They say: Interest rates are so low. The service of a mortgage has never been so simple.

It is true that mortgage rates below 4% are the lowest for more than half a century.

But that does not mean that first time home buyers have an easy life.

When I took out my first mortgage, the interest rates were 8% for two years. But the loan only amounted to $ 250,000, so we had the impression today of a $ 500,000 mortgage.

Across the country, the first average home buyer borrowed $ 389,006 in October. The borrowers of Auckland would have borrowed much more.

The amounts paid for houses are substantial, although interest rates are not currently.

CoreLogic data indicate that the median price paid by first-time home buyers this year was $ 470,000 nationally and $ 750,000 in Auckland.

Our wages have not kept pace with the housing market. From 1957 to the late 1980s, New Zealand's average house price was between two and three times the average annual household income. In Auckland, ratios are now ten times larger.

Borrowing a debt ten times more than your annual income is a different proposal of three times your income, regardless of the price of the service.

Interest rates will eventually rise, and these buyers will have to continue paying off this debt for decades.

Unlike the generation of their parents, who had to deal with an inflationary tsunami that wipes out the real value of much of their debt, modern buyers are likely to feel the weight of their mortgage debt during most of their professional lives.

They say: Real estate price growth has stagnated, so you have the option to recover your deposit.

Of course, but how long have you been away?

If you want to get a 10% deposit (and are willing to pay the higher interest rate that goes with it), you still need to save $ 75,000 in Auckland and $ 47,000 in the rest of the country.

KiwiSaver will help you – if you're involved from the beginning, you're probably close to that goal. But withdrawing your retirement savings to buy a house is a sacrifice and means you'll need to save more for the rest of your working life.

Aside from KiwiSaver, if you want to save $ 75,000 in five years, you must set aside $ 255 per week for a profitable investment of 5% per year.

This is difficult in an environment where Wellington's rent is up 10% over the previous year and that of Auckland brings in $ 600 a week on average.

People suggest that buyers come together to share a house in order to cut costs, but when more of us buy later in life, once we already have kids, this does not happen. is more feasible.

They claim: you get help from the government!

There are programs to help buyers.

If you use your KiwiSaver money as a deposit, you can get a HomeStart grant of up to $ 10,000 per couple for an existing home or $ 20,000 for a new build.

There are also welcome housing loans for those struggling to qualify for a 10% home loan, and KiwiBuild is offering more affordable housing.

But there are problems here too.

HomeStart requires buyers to have a joint income of up to $ 130,000. KiwiBuild is a little more generous, at $ 180,000. At a time when buyers are in a financial position to consider a purchase, many earn more than this limit.

HomeStart buyers can only purchase properties up to $ 650,000 in Auckland and Queenstown, $ 550,000 in most regional centers, and $ 450,000 in others. Buyers say it's hard to find places in these price ranges, even if you qualify.

KiwiBuild still runs on a voting system, so you must be drawn to succeed.

Buyers are encouraged to consider homes in the suburbs of Auckland, resulting in high transportation costs for those working in the city.

They say: It is easier to get a mortgage creditor

The Reserve Bank has announced that restrictions on value loans will be relaxed from January.

This means that banks can give a little more of their loans to people with a deposit of less than 20%.

This is good news for first-time homebuyers, but it is estimated that about 5,000 homes will be funded per year, but they would not be otherwise. Think back 10 years and many people were returning to their first homes with a 100% security deposit. Who has the easiest, really?