The Nelson property market is proving a hard nut to crack for wannabe homeowners, with the average asking price reaching $642,298. Reporter Kate Russell investigates how first-home buyers in the city are faring.
Ned and Rachael Worboys uprooted their life in Wellington close to family and moved to Nelson in January, in hope of being able to buy their first home to raise their two young sons.
Nearly one year and 30 house viewings later, they are still searching.
“We couldn’t afford to buy in Wellington and Nelson just seemed like the most brilliant idea,” says Rachael, a stay-at-home mum.
The young family started looking at houses here before they even moved and “browsed the internet” for listings a year prior to that.
They are considering properties in the low to mid 400s all over the region, with a healthy deposit and their parents as guarantors.
“We just keep getting priced out and finding that houses are being sold for $40,000 – $50,000 over the asking price,” says Rachael.
A two-bedroom house in Toi Toi that the family viewed recently sold for 75 percent over its RV with 34 interested buyers through.
“Also, a lot of houses aren’t in very good shape and would need immediate work – but we wouldn’t have any money left over for that.”
So far, the only realistic option has been a home with 42 years’ worth of smoke damage.
Rachael says they have been waiting for the typical “spring surge” in listings – which hasn’t seemed to have sprung yet.
In fact, the latest figures from realestate.co.nz show the number of new listings in Nelson during October decreased by 0.9 per cent.
The family currently pay $410 per week for a two-bedroom rental property in Washington Valley.
“There was plenty of interest in our rental, so we feel lucky with what we have,” says Ned, a teacher at Nelson Intermediate School.
Tall Poppy Real Estate salesperson Simon Collins says he is seeing many “exhausted” first home buyers.
It’s no wonder why. Three years ago, entry level first homes in Nelson city fringe suburbs were $300,000 – $350,000. The same houses are now $450,000 – $500,000.
“That’s a large increase in value in a short period of time,” says Simon.
“Typically, any reasonably priced, especially in the city fringe suburbs are going to multiple offers. There is a lot of competition, especially in the lower bracket. There’s a lot of desperation out there.”
Simon says although the number of investors has dwindled, first home buyers are now competing against out-of-town retirees and cashed up professionals moving to Nelson.
“With Kiwisaver, they are still managing to purchase some homes up to $500k, however these buyers tend to have double incomes and no kids. First home buyers are stretched financially to meet the servicing of loans – even at record low interest rates.”
Property InDepth Nelson valuer Jaimie Barber says Ned and Rachael’s story is a common one.
“What I’ve noticed is that first home buyers can still get property, but they are either smaller houses and the quality is lower. They are buying themselves more work.
“Relative to Christchurch, Nelson is less affordable now.”
The Nelson suburb of Britannia Heights also joined the ‘$1 million suburb’ ranks this year.
Simon’s advice for first home buyers is to have a builder ready to go to check the house and an experienced person to view the council files.
“Also, that they have clear instruction from their bank as to the amount they can borrow, and timeframes for lending. This puts them in a stronger position for popular properties.”
Meanwhile, Ned and Rachael say they’ll keep searching for their home-sweet-home.
“We’re considering flyer dropping, Kiwibuild and building ourselves,” says Rachael.
“It’s no longer about where you want to live, it’s about where you can live.”