KiwiBuild’s ‘discounted’ property prices have made the scheme attractive to first home buyers – however, CoreLogic research suggests this discount may be very minimal for property within certain brackets.
Data shows that for new or existing one-bedroom properties, first home buyers across Waitakere, North Shore and Wellington have paid median prices below the $500,000 KiwiBuild cap – however this doesn’t apply to Auckland, where the median price is $50,000 above the cap for a new property.
The price cap becomes more significant in the Auckland and Queenstown two-bedroom bracket. The Auckland City cap for a two-bedroom currently sits at $600,000, and will no doubt be of significant interest to first home buyers compared to the $713,000 average current market price. Two-bedroom properties in Wellington are still slightly below the cap, with a median price of $496,250.
Prices across Auckland and Queenstown in the three-bedroom bracket sit comfortably above the $650,000 KiwiBuild cap, however they fall well below the cap around the Wellington regions of Upper and Lower Hutt, and in areas of the South Island including Christchurch and Dunedin.
According to CoreLogic senior research analyst Kelvin Davidson, current prices and cap levels mean many first home buyers won’t see a meaningful price reduction beyond current property prices.
“What we’ve found is that KiwiBuild properties outside Auckland, priced at the cap and within the one-bedroom bracket won’t see a real discount at the moment,” Davidson told NZ Adviser.
“However, depending on how long those caps stay fixed at those levels, the market might rise above them over time. This is also provided that the prices are level with the cap, which is obviously a maximum and not a minimum.”
“Of course to make this work, there have to be KiwiBuild properties available to buy,” he added. “At the moment, it doesn’t look like there is much on the KiwiBuild radar for the Auckland CBD.”
Davidson says the overall scheme is ‘commendable’ and will nonetheless improve affordability for many potential buyers, but that demand levels are also likely to be an issue.
“It is a bit of a lucky draw scenario,” he stated. “The ones who ‘win’ will definitely benefit, but there will also be a lot who miss out.
“Nonetheless, the price caps are significantly below what people have been paying as soon as you get into the bigger property sizes, so it will definitely improve affordability for people.”