Relative resilience due to several factors
First-home buyers (FHBs) in New Zealand have achieved a record market share of 27%, defying rising interest rates and market volatility throughout 2023, according to the latest CoreLogic figures.
The CoreLogic January Housing Chart Pack showed that FHB activity reached 27% in December, culminating in an annual market share of 25.8%, surpassing the previous peak of 23.1% in 2021.
Factors propelling FHBs to a historic market share
Kelvin Davidson (pictured above), CoreLogic NZ chief property economist, hailed FHBs as the standout success story of the property market in 2023, marking the first time they outpaced other buyer groups.
“There are a number of reasons for their relative resilience, but key factors include access to KiwiSaver to boost the deposit, a willingness to compromise on location or property type, the ability to tap the low deposit lending speed limits at the banks, and less competition from other buyer groups,” Davidson said.
Although the record share reflects strength, the actual number of FHB purchases, approximately 17,000 in 2023, is still below previous highs. The figure is up from 14,500 purchases in 2022.
How about the MPOs and movers?
In comparison, mortgaged multiple property owners (MPOs), including investors, recorded their quietest year since 2005, with around 14,000 purchases or 21% of market activity.
Relocating owner-occupiers (movers) also exhibited relative quietness, constituting only 25% of activity in the fourth quarter of 2023. Davidson attributed the decline in MPOs’ activity to factors such as LVR restrictions, low gross rental yields, high mortgage rates, and unfavourable interest deductibility rules.
“That said, their market share has just started to edge higher in the past month or two, so they're definitely a buyer group to watch as the market enters a new cycle,” he said.
Market outlook for 2024
Looking ahead to 2024, the property market is expected to continue its recovery, albeit potentially underwhelming due to persistently high mortgage rates and the prospect of debt-to-income ratio caps later in the year.
The January Housing Chart Pack also highlighted key insights, including the worth of residential real estate at $1.59 trillion, a 1% rise in national property values in December, increased sales volumes, rising rental growth, and evolving market dynamics.
For more details, you can download the Housing Chart Pack
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