House buying more difficult
By MIKE HOULAHAN - The Press | Friday, 28 November 2008

Couples will find their first home harder to buy as banks increase their minimum deposit rates, budget advisers say.

ANZ National this week doubled the deposit required for mortgage lending from 10 to 20 per cent, meaning Christchurch property buyers will need to save $62,000 to be able to make an offer on a $310,000 house the region's median price.

Deposits are even higher for buyers in Auckland and Wellington.

Auckland's median price of $433,000 means people will need an $86,600 deposit, while buyers in the capital must save $73,800 to buy a median-priced $369,000 property.

Family Budgeting Services secretary Raewyn Fox said the move would be hard on first-home buyers.

People who had bought in the past few years, when property prices and mortgage rates were higher and deposit rates were lower, might have a house but be facing a financial squeeze.

"There being some sort of a requirement for a higher deposit will make people think harder before they go into a major financial commitment. With the price of houses, 20 per cent is rather a lot of money," Fox said.

"With the current financial situation, we had expected the deposit rate to rise. This is not a surprise."

She said young couples with no children would be able to raise a deposit, but many budget advice clients were middle-aged couples with children who were already struggling to save, let alone meet the expense of raising children.

"If you are one of those people, it (home ownership) is quite out of reach. But those are the choices people have to make and they need to decide what is most important to them," Fox said.

Keith and Lynette Brand made hard choices in the mid-1990s, when they saved $100,000 in three years to make a substantial downpayment on their first home, in Redwood.

Lynette Brand said they decided to save her gross income as a teacher, with a portion of her husband's income as a computer programmer covering the tax paid on her salary.

Also giving up luxuries, they reached their target just before they started a family.

"We didn't really limit ourselves, but we just didn't spend money on things we didn't need," she said.

"We weren't picture or theatre-goers, we're not alcohol drinkers and we didn't smoke, so it must save quite a bit of money when you're not doing those sort of things. We also weren't people who ate out at restaurants.

"We ate ordinary food and we didn't go on holidays overseas. We did a lot of bike touring at the time."

The Brands bought the Redwood house for $170,000 in 1996. With their family expanding to six children, they recently needed to move to a bigger home and applied a similar sense of fiscal responsibility to the purchase of their Burwood home.

"We just felt really strongly that the bigger deposit you had the much better off you were in the long-term," Brand said.

"We could have bought more and had a bigger mortgage, but we weren't prepared to go down that track."

From here.