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First home buyer sales slump but market share high

House sales to first home buyers have slumped to their lowest level in 11 years, but it’s not all bad news for mortgage advisers.

Friday, May 12th 2023, 11:32AM

by Sally Lindsay

While just over 3,250 houses were sold to FHBs in the first quarter of this year, their market share at 25% is on par with previous record highs and well above the long-term average of 21-22%, CoreLogic’s latest First Home Buyers report says.

“Even if the downturn in prices does end in the second half of this year, we doubt that the market is going to boom again straight away – especially if caps on debt to income ratios are imposed in March or April next year, which now looks almost certain,” Kelvin Davidson, CoreLogic’s chief property economist says. 

“With the housing market in the low phase of the cycle, sales activity has been subdued as buyers are held back by higher mortgage rates and credit constraints.”

The report shows market conditions impacting all buyer groups, but FHBs held on relatively well by optimising the weaker conditions.

The national trends are reflected across the main centres, with all six higher than average market share for FHBs.

Hamilton is strongest, with a FHB market share of 33% in the first quarter, about nine percentage points higher than its average. FHBs’ share topped 30% in Wellington compared to the average of 29%, while Christchurch, Auckland, and Dunedin were also above normal. Tauranga was quite a bit lower at 17%, but still slightly above normal for that market, which averages 16%.

Davidson says key reasons for the relative strength include using KiwiSaver for deposits, willingness to compromise on type and/or location of a property, and low deposit lending quotas at the banks. Wider downturn in values and relatively high stock of listings on the market also helped.

Median price

Despite buying larger or freestanding homes, the median FHB price fell from $730,000 last year to $680,000 in the first quarter of this year – significantly higher than the lower quartile across all buyers, of $555,000. Given the higher proportion of houses within all FHB purchases, the recent drop in prices paid isn’t due to them being  smaller or cheaper properties, says Davidson.

“The median FHB price in the main centres is lower than the figure for all buyers, but higher than the lower quartile for all buyers, which reinforces the fact that the ‘typical’ FHB doesn’t always enter at the bottom of the market and work their way up – many actually enter the market well above the ‘bottom rung’ of the ladder,” he says.

Auckland had the highest FHB median in the quarter, at $885,000 compared to $1m a year ago, with Wellington, Tauranga, and Hamilton ranging from $775,000 to $730,000, and Christchurch and Dunedin both sub-$600,000 to $580,000, and $531,000 respectively.

Urban areas

The relative strength for FHB market share held steady across the 12 other main centres around New Zealand.  Invercargill, grew 12 percentage points to 34% from its long-term average, while Napier, Hastings, and Rotorua also saw solid performances over the quarter. Whangarei, Nelson, Gisborne, Whanganui, Palmerston North, and Kapiti Coast were also relatively strong.

By contrast, in New Plymouth  the quarter was in line with its long-term average of 21%, and in the expensive Queenstown market the share fell from the long-term average of 15% to 13%.

The total number of properties for sale in March had increased 35% in the region year-on-year, but a third of the stock was land only.

Houses are the dominant type of property amongst the existing housing stock in urban areas, and therefore also account for a high share of FHB purchases.

Standalone houses represented 96% of FHB purchases in Rotorua, while Invercargill, Palmerston North, New Plymouth, and Gisborne topped 90%.  Kapiti Coast, Whanganui, Hastings, and Napier were 80-90%, while Whangarei and Nelson were around 75%. Reflecting a wider range of property types and affordability pressures, houses were 58% of Queenstown FHB purchases.

The highest median prices paid by FHBs amongst the main urban areas was $875,000 in Queenstown, with Kapiti Coast back in second position at $668,500. In Whangarei, Nelson, Napier, New Plymouth, and HastingsFHBs the median was $600,000. At the other end of the spectrum, Whanganui had a median price of $425,000, and Invercargill $400,000.

FHBs should continue to see relatively favourable conditions for a while yet, albeit mortgage rates seem unlikely to suddenly fall sharply anytime soon, he says.

Tags: first home buyers

« Market keeps getting worse as sales collapseInvestors buying power plunges »

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 ▼6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 ▼6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - ▼6.79 - -
Co-operative Bank - Owner Occ 8.40 ▼6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 ▼7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 ▼6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.74 7.29 6.59
SBS Bank Special - 7.14 6.69 5.99
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.35 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.75 6.65
Median 8.64 7.21 7.29 6.65

Last updated: 20 May 2024 10:01am

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