First home buyers hold on

Despite continued affordability pressures, tight lending rules and higher mortgage rates, New Zealand’s first home buyers have maintained their record high market share over the past two quarters. 

CoreLogic’s latest First Home Buyer report, released last month, shows the number of purchases made by first home buyers in the first quarter of this year was 3260; the lowest for that quarter of the year since 2011. However, that group has held onto its market share of around 25 percent – on par with previous record highs and well above the long-term average of 21-22 percent.

CoreLogic NZ Chief Property Economist Kelvin Davidson says key reasons for the relative strength of first home buyers, include using KiwiSaver for all or part of their deposit, a willingness to compromise on the type and/or location of a property, and making use of the low deposit lending quotas at the banks. “The wider downturn in values and relatively high stock of listings on the market has also helped finance-approved first home buyers, and brought a wider range of properties back onto their radar,” Davidson says.

The national trends are being reflected across all the main centres.

“Looking ahead, even if the downturn in prices ends in the second half of this year, we doubt that the market is going to boom again straightaway – especially if caps on debt to income ratios are imposed in March or April next year, which now looks almost certain,” Davidson says. “In other words, first home buyers should continue to see relatively favourable conditions for a while yet, although mortgage rates seem unlikely to suddenly fall sharply anytime soon.”

CoreLogic’s report is at www.corelogic.co.nz/