Tauranga's Housing Market Challenges and Saving for a Deposit.

For many first-home buyers in Tauranga, the dream of owning a home can seem increasingly out of reach. The soaring prices in Tauranga's real estate market have created significant challenges for those looking to save for a house deposit. A recent article in the Bay of Plenty Times has found the road to homeownership in Tauranga appears to be longer than any other main centre in New Zealand.

CoreLogic NZ’s research has revealed that an average wage-earning household in Tauranga would need 11.3 years to save a 20% deposit on an average-priced house, surpassing the savings timelines in other major cities like Auckland, Wellington, Christchurch and Hamilton. In this article, we look at the complexities of Tauranga’s housing market and explore the factors contributing to the challenge of saving for a house deposit in this region.

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Why is Tauranga so expensive?

A Desirable Location: The allure of Tauranga, with its idyllic coastal setting and vibrant lifestyle, continues to attract a diverse range of buyers, further intensifying the competition within the housing market. House prices reflect this desirability and lead to limited availability of properties.

Wealth Influence: Analysts attribute the extended savings period to the affluent nature of Tauranga’s property market, fueled by an influx of wealth from other regions, which then drives up housing prices beyond the reach of local incomes. CoreLogic chief property economist Kelvin Davidson believes, “People are bringing in wealth from other parts of the country and that’s pushing up house prices.”

Rising Property Values: Despite fluctuations, Tauranga’s residential property values have continued to climb, further exacerbating the affordability crisis and posing challenges for both buyers and renters in the region. This elevated market sets a daunting pace for first-home buyers, who find themselves in a relentless race against an ever-increasing goalpost. In the latest OneRoof Valocity House Value Index, Tauranga’s average residential property value was up 1.5 per cent. At the end of January, the average house price was $1.093m.

Cost of Living: Tauranga’s cost of living, mirrors the premium placed on its real estate. Everyday expenses, such as rent, groceries, and utilities, are high in this desirable region, eroding the portion of income available for savings. In December, the Bay of Plenty overtook Auckland to become the most expensive renting region in the country. This continuous financial pressure complicates the path to saving a substantial deposit, often stretching the timeline far beyond initial expectations.

Navigating the Market with a Mortgage Broker

In a market as competitive as Tauranga’s, where every advantage counts, the role of a mortgage broker cannot be overstated. A broker’s deep understanding of the nuances within the housing market and their connections with a wide range of lenders can unlock doors that might otherwise seem closed. They have the tools and knowledge to dissect your financial situation, offering bespoke advice that aligns with your unique circumstances and homeownership aspirations.

Employing the services of a mortgage broker can significantly demystify the process of securing a mortgage, presenting options that might not be evident when navigating the journey alone. They can find competitive mortgage rates and favourable loan conditions, which can prove pivotal in managing long-term financial commitments. Furthermore, their insights into the timing of the market, understanding of paperwork intricacies, and ability to negotiate with lenders can streamline the path toward securing a deposit.

Strategies for Saving Your Deposit

The challenge of saving up a sufficient deposit in Tauranga’s market calls for more than just traditional saving tactics. First-home buyers need to embrace a holistic approach to financial management. Starting with scrutinising their spending habits, and identifying areas where cutbacks can significantly boost their savings rate. Innovating ways to augment income, whether through side hustles or maximising returns on investments, can also expedite the journey toward achieving a deposit.

Moreover, it’s important to stay informed about government initiatives designed to aid first-home buyers. Programs such as the KiwiSaver HomeStart grant and Kāinga Ora offer tangible assistance, potentially easing the financial burden of entering the housing market. Proactively seeking out these opportunities can make a substantial difference in your savings strategy. Employing these methods requires discipline and a commitment to long-term goals. By methodically reducing expenditures, enhancing income, and capitalising on available financial assistance, first-home buyers can navigate Tauranga’s competitive housing landscape more effectively.

Need help saving for a deposit? Get in touch with the team at Rapson Loans and Finance today.