"Homeownership for now is in reach of more Kiwis" – C21NZ

“Despite interest rate rises, it’s arguably easier – not harder – for first-home buyers to crack into the housing market for now,” said Tim Kearins, owner of Century 21 New Zealand.

Kearins’ comments follow the release of Interest.co.nz’s Home Loan Affordability Report for May, which showed that the Real Estate Institute of New Zealand’s national lower quartile selling price fell from $640,000 in April to $628,000 in May.

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“This means a reduction in the required deposit and a reduction in the amount needed to be borrowed and repaid,” Kearins said. “While this month-to-month movement is not dramatic, it will nonetheless help more Kiwis realise their homeownership dreams.”

When also factoring in the effects of rising interest rates from April to May, the Home Loan Affordability Report concluded that first-home buyers were still ahead overall – albeit marginally.

“House prices are certainly softening,” Kearins said. “At the same time, the Reserve Bank has indicated that interest rates will continue to rise for the foreseeable future. Locking in a good interest rate can be more important than a lower house price when it comes to buyers’ ability to service debt. That’s why many first-home buyers are taking the plunge now.”

Kearins said more tenants are reaching for mortgage calculators and meeting with brokers to assess their chances of securing a loan – this as TradeMe’s latest rental price index showed the national median weekly rent edging closer to $600, with rents up 7% on a year ago.

“Also helping first-home buyers’ motivation and chances is the fact that they now have greater access to government help, making it slightly easier to cobble together a deposit,” Kearins said.

Budget 2022 offered assistance to thousands more first-home buyers by increasing house price caps for the First Home Grant and removing price caps for the First Home Loan scheme.

Read next: Government urged to promote its first-home buyer schemes

Kearins said the proposed changes to the Credit Contract & Consumer Finance Act (CCCFA),  which will take effect on July 1, will also hopefully provide homebuyer hopefuls with additional help.

“The hoops and hurdles for first-home buyers have been many,” Kearins said. “However, with prices for entry-level homes softening, government support widening, and stringent lending requirements lessening, homeownership for now is in reach of more Kiwis.”