First-home buyers gain prominence
In the current softened property market, first-home buyers (FHBs) in New Zealand are making a substantial impact, representing over one quarter (27%) of all property purchases.
This figure surpasses the long-term average of 21%, signaling strong activity from this segment despite the ongoing challenges in housing affordability, according to the latest CoreLogic First Home Buyer Report.
Innovative buying strategies employed by FHBs
Kelvin Davidson (pictured above), NZ chief property economist, highlighted the resilience and adaptability of FHBs.
“It’s never easy to get that first home and stretched housing affordability – despite falling mortgage rates – remains a key challenge.”
FHBs are leveraging various strategies to overcome these hurdles, such as low-deposit lending options, utilizing KiwiSaver funds for deposits, and making compromises on property locations and types.
“The allure of ‘a foot on the ladder’ clearly remains strong, especially in the current market where house prices are down and abundant listings favour buyers,” Davidson said.
FHBs securing favourable deals
Recent trends indicate a decline in the median price paid by FHBs – from $715,000 in 2022 to $685,000 in the first nine months of 2024.
This drop occurs even as standalone houses, which are typically larger and more expensive, constitute a larger proportion of FHB purchases.
“This signals that FHBs are getting ‘good deals’ in the current conditions,” Davidson said.
Regional strength and market share
FHB activity is robust across New Zealand, with significant market shares in major and minor centres alike.
Wellington leads among the main centers with nearly 35% of purchases by FHBs, while Tauranga shows a lower yet substantial 23% participation. Hamilton and Tauranga have experienced market shares 7% above their historical averages, underscoring the widespread strength of FHBs across regions.
Future outlook for FHBs
Looking forward, the market conditions for first-home buyers, while potentially becoming more competitive, still hold promise.
Davidson anticipates that lower interest rates may continue to motivate FHBs, despite expected increased activity from mortgaged investors. Additionally, certain banking allowances for lending outside standard debt-to-income ratios could support FHBs in pricier markets.
“All signs point to FHBs continuing to hold onto an above-average share of property purchases in the next six to nine months, given other groups including investors are still facing challenges,” he said.
Read the CoreLogic announcement or download the First Home Buyer Report for more information.
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