The homes that fit under new price caps
Changes to the First Home Loan scheme price caps are part of the Government’s latest move to tackle the housing crisis. Miriam Bell looks at what you can actually get for the new price limits.
Last week, the Government announced a suite of policies aimed at reining in the housing market and rebalancing it to provide greater opportunities for first-home buyers.
Those policy measures included changes to the Home Start Grant and First Home Loan schemes.
The salary cap has been increased for potential buyers: single people can now earn up to $95,000 (up from $85,000) and qualify for the schemes, and couples can earn up to $150,000 (up from $130,000).
There is also an increase to house price caps, which will allow buyers to receive the grants and loans for slightly more expensive houses.
From Thursday, the price caps for new homes will rise to $700,000 in Auckland, $650,000 in Wellington, $600,000 in Nelson, Tauranga, Western Bay of Plenty, Hamilton, Waipa, Hastings and Napier, and $550,000 in Dunedin and
Waikato.
The price caps will remain unchanged at $650,000 in Queenstown, $550,000 in Christchurch and at $500,000 throughout most of the rest of New Zealand.
Any increase to the price caps is a welcome change for firsthome buyers, but many commentators believe the price caps are still set to low, particularly given the recent escalation in house prices.
Real Estate Institute acting chief executive Wendy Alexander says only 13 per cent of properties sold nationwide fell under the current thresholds, so the changes should allow more people to take advantage of the scheme.
‘‘This should be particularly true in places such as Porirua, Lower Hutt and Tauranga, where only 2 per cent of properties sold recently were below the threshold.’’
However, the fact that the price caps in some areas, including Queenstown-Lakes, Waimakariri, Selwyn, Christchurch and the rest of
New Zealand, would remain unchanged was a surprise, she says.
CoreLogic head of research Nick Goodall says it is likely that a segment of potential first-home buyers will benefit from the changes but those at the lower end of the market will not.
He says there is a stark contrast between what firsthome buyers can buy under the price caps and what they are actually buying in most parts of New Zealand.
‘The changes should allow more people to take advantage of the scheme, particularly in places such as Porirua, Lower Hutt and Tauranga.’ WENDY ALEXANDER, Real Estate Institute acting chief executive
For example, in Auckland and Queenstown the price cap is about 25 per cent below the lower quartile price for all properties.
‘‘So about 10 to 15 per cent of all properties would be worth less than the cap. And that’s across all properties, let alone the properties that are actually up for sale.’’
That means the price cap changes might provide a little extra leeway for some buyers, but they won’t make a big difference for many in the broader scheme of things, he says.
So what can you buy in various parts of the country?
SUPER CITY OPTIONS
In Auckland, the price caps have been lifted from $600,000 to $625,000 for an existing property and from $650,000 to $700,000 for a new build. However, those caps are well below the region’s median price and value.
The latest Real Estate Institute figures has the Auckland region’s median price hitting a new record of $1.1 million in February. CoreLogic put the region’s average value at $1.2m in February. CoreLogic figures also show that 139 Auckland suburbs now have a median value of at least $1m.
To dig deeper, Homes.co.nz found only four suburbs in Auckland had a median HomesEstimate of less than the new price cap of $700,000.
Those suburbs are Clendon Park with a median of $668,000; Grafton, $578,000; Manukau $599,000; and Auckland Central $526,000.
Homes.co.nz chief data scientist Tom Lintern says the figures come with the caveat that they are median estimates and that, as with the rest of the country, more affordable options can be found in most suburbs.
‘‘But for those trying to find a property under Auckland’s $700,000 price cap, the best options are higher-density dwelling options, like townhouses and apartments. There are plenty of apartment options in the central city,’’ Lintern says.
One example of an apartment currently for sale well under the existing dwelling price cap of $625,000 is a small one-bedroom apartment in Union St in the city. It is listed for $250,000.
Another is a one-bedroom apartment with a study and a balcony in Swanson St, also in the central city. That’s going for $529,000.
But there are also a range of new developments around the city that are selling dwellings for under the new build cap of $700,000. The Pacific Gardens development in Manukau has apartments priced from $395,000 and terrace homes from $599,000.
LOOKING TO THE SOUTH
CoreLogic figures show Wellington has 26 $1m-plus suburbs and not a single suburb with a median of less than $500,000. Homes.co.nz has the region with just 12 suburbs with a median of less than its new price cap of $650,000.
Apartments also look to be a good option. One example is a recently refurbished twobedroom, two-bathroom apartment on Eva St in Te Aro. It’s listed for sale for $490,000.
But Lintern says that, by and large, the southern centres of Christchurch and Dunedin fare better than the main North Island centres.
There has been strong price growth in both cities, particularly Dunedin, over the past year. Yet, despite this, between the two cities there are 71 suburbs with median HomesEstimates of less than $550,000, which is now the price cap in both.
Additionally, Goodall says Christchurch’s price cap is about 23 per cent above the lower quartile price of all properties. This means that buyers in the area do have more options available under the price caps than those in many other areas.
In Christchurch, a twobedroom, one-bathroom unit on
Hawthorne St in Strowan, is listed at $450,000, and a twobedroom, one-bathroom unit with a larger section on Brabourne St in Hillsborough is listed for $409,000.
The situation is tougher in Queenstown, where the price cap is $650,000. Lintern says there are no suburbs with median values of less than the cap, although the market could be more susceptible to price changes in the future due to the ongoing economic impact of Covid.
Homes.co.nz has just 12 listings for under $650,000 in the town. One of those is a twobedroom, one-bathroom house in Kent St in Kingston, listed for $549,000.
EAST COAST IMBALANCE
One area that has seen particularly rampant house price growth over the last year is Gisborne. According to the Real Estate Institute, Gisborne saw a 32.2 per cent increase in its median price in the year to February, which took it to a record high of $595,000.
Despite this, Gisborne has not had a change to its price cap. It is classified as being in the ‘‘rest of New Zealand’’, which means that its price caps remain set at $400,000 for existing homes and $500,000 for new builds.
Lintern says there are just seven suburbs in Gisborne that have a median HomesEstimate of less than the price cap of $500,000. It was not possible to find an example of a Gisborne property listed on Homes.co.nz for $500,000 or under.
However, an example of a property that has a median HomesEstimate value of less than $500,000 is a four-bedroom, one-bathroom house with a large section on Aberdeen Rd in Gisborne.