$600,000 to buy a home

The median house price in Tauranga is now $600,000. File photo.

Prospective homebuyers may have to find up to $600,000 to get into a home in Tauranga.

That's the new median price for a house in the city, according to figures released by the Real Estate Institute of New Zealand.

Buyers looking in Mount Maunganui or Papamoa will need an extra $15,000 on top of that, with the median price in those suburbs at $615,000.

In the year to December 2016, house prices increased 27.7 per cent in Tauranga, and 9.8 per cent in the Mount and Papamoa.

According to Sorted.org.nz, most home loan lenders require a minimum deposit of 20 per cent, which means homebuyers in Tauranga, Mount Maunganui and Papamoa could be looking at trying to raise a deposit of $120,000 or more, if trends continue.

Buyers who do manage to raise that amount will have a $480,000 mortgage to pay off, plus interest. At 5 per cent per annum, interest accumulation works out at $24,000 a year, or $461 a week.

Tauranga Budget Advisory Service manager Diane Bruin says housing costs in general have been very challenging for their clients.

'Mortgage repayments are starting to creep up due to increases in interest rates. Interest rates have been low for some time now, so it has been affordable to add on a new car or holiday to the mortgage,” she says.

It means even a slight rise in interest rates could put many people in a precarious financial position.

'If one person gets sick or is out of work it can place huge pressure on the household. At worst it can eventually end in mortgagee sales or insolvency.”

She says rents are no better in some cases, with the cheapest rent she's seen for a house being $475.

'Rents have increased dramatically compared to a year ago. $500 plus a week for mortgage or rent is very tough on a Tauranga family unless both parents have a good income.”

She says the service has been extremely busy since returning on January 4, with the many crises people are dealing with.

'The demand has doubled for our services compared to this time last year.”

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