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Market share soars for first home buyers

First home buyers bought 27% of houses sold over the third quarter of this year – a new record high.

Thursday, November 9th 2023, 3:54PM

Over the year to date, FHBs sit at 26% market share, comfortably above the long-term average of 21%, however the number of deals still sits below past norms in a relatively subdued market, CoreLogic’s six-monthly First Home Buyer Report shows.

Kelvin Davidson, CoreLogic NZ’s chief property economist says it’s been a strong market for FHBs, with many key factors still in their favour.

“It wouldn’t be a surprise to see FHBs continue to hold onto an above-average share of property purchases in the next six to nine months.

“We do not expect runaway growth in house prices for the foreseeable future, especially if or when caps on debt-to-income ratios for mortgage lending come into force next year. Affordability also remains a handbrake, as do high mortgage rates.”

He says however, with the change of government and the slow softening of the tax system for property investors that lies ahead – namely a shorter Brightline Test and the full reinstatement of mortgage interest deductions – FHBs may find some competition returning from this cohort.”

“To be fair, low rental yields and high mortgage rates, hence high ‘top ups’ from other income sources, could prevent a strong return from property investors. But this FHB Report probably still marks a line in the sand, and FHBs may start to see some competing buyers returning.”

Running away

Despite stretched affordability, high interest rates, and cost of living pressures, FHBs in New Zealand continue to lead the market as buyers, highlighting the continued strong appeal of having a “'foot on the ladder”.

FHBs are still finding a way to buy, whether it’s using the low-deposit lending speed limits at the banks, tapping their KiwiSaver to help with the deposit, securing First Home Grants or First Home Loans, or compromising on the size or location of their home, Davidson  says.  “They are proving relatively more successful in buying their first home than at any other time.”

The national trends are being reflected across the six main centres, with above-average shares of FHB purchases so far in 2023.

Wider Wellington has held the strongest market share for FHBs with 33% of buys in the year to date, 4% above normal. At the other end of the spectrum, FHBs in Tauranga held 21% of purchases, 5% above normal). Auckland, Christchurch, and Dunedin each report 5% higher than average, with Hamilton 6% above for 2023.

Provincial markets show a similar trend with Invercargill holding the strongest market share for FHBs with 32% of buyss, a significant 10 percentage points higher than the long-term average. Whangarei and Rotorua are other examples of “FHB hotspots”, as are smaller areas such as South Waikato and Clutha.

FHB median price

FHBs have benefitted from the wider downturn in property values over the past 18 months, with the median price paid falling from $720,000 last year to $690,000 in 2023 to date.

Davidson says the typical FHB often enters the market above the 'bottom rung', rather than starting from the bottom.

“For example, $690,000 is lower than the median price paid across all buyers at $762,500, but it’s significantly higher than the lower quartile across all buyers at $565,000.”

Auckland FHBs pay the most at a median of $875,000 so far this year, $107,000 less than the all-buyer median of $982,000. Median FHB prices paid range between $700-$750,000 in each of Tauranga, Wellington, and Hamilton, and sit at $600,000 in Christchurch, and $530,000 in Dunedin.

Property type

Standalone houses have accounted for 71% of FHB buys nationally in Q3, which is on par with last year’s figure but less than the 75%-80% share over 2019 and 2020.

Flats have increased to 22% of FHB purchases in the year to date, up from 21% last year and 18% across all buyers. “Factors likely contributing to this include better affordability and availability of smaller dwellings like townhouses or apartments in these main centres,” Davidson says.

Across the main centres, standalone houses account for the highest shares of FHB purchases in Dunedin (89%), Hamilton (88%), and Tauranga (87%). These figures for the year to date are close to their long-term averages.

Davidson says house buys in Auckland, Christchurch and Wellington over this year have been comparatively low compared to past norms.

Property type % of purchases

Across New Zealand’s main urban areas FHB market share has remained strong this year.

Invercargill has had the highest market share for FHBs with 32% of purchases in 2023 to date, a full 10 percentage points above the long-term average. Whangarei, Rotorua, Napier, and Hastings each recorded at least five percentage points higher than normal.

In contrast, Queenstown has seen FHBs continue to struggle a little this year, with a market share of only 13%, down from its long-term average of 15%.

Davidson says in the main urban areas houses account for a significant portion of FHB purchases given the makeup of housing stock.

“Over this year to date, houses have accounted for 93% of FHB purchases in Rotorua, with that figure also topping 90% in Gisborne, Whanganui, Palmerston North, and Invercargill. Figures of 80-90% have been seen in Whangarei, Napier, Hastings, New

Plymouth, Kapiti Coast, and Nelson. Queenstown’s figure for houses as a share of FHB purchases fell to 53%, reflecting a wider range of property types and affordability pressures in that market.”

In terms of median prices paid by FHBs so far this year, the highest figure has been in Queenstown at $967,500. Whangarei, Napier, Hastings, Kapiti Coast, and Nelson have all been in the range of $600-$700,000, with lower prices being paid by FHBs in Whanganui ($425,000) and Invercargill ($400,000).

« New faces but not enough placesMany buyers, not enough properties again fuelling housing market »

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.45 7.05 6.85
ANZ 8.64 7.99 7.49 7.35
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.39 6.89 6.75
ASB Bank 8.64 7.39 6.89 6.65
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 - 7.29 6.85 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 ▼7.89 ▼7.45 ▼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 - ▼7.09 - -
Co-operative Bank - Owner Occ 8.40 ▼7.29 6.89 6.75
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 ▼7.79 7.39 7.25
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 6.69 6.45 6.19
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 6.85 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.59 7.29
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.35 7.89 7.65
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.35 6.89 6.75
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.90 7.39 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.30 7.89 7.69
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.30 8.89 8.69
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.95 7.45 7.29
SBS Bank Special - 7.45 6.95 6.79
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 7.05 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.19 7.55 7.55
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 7.39 6.75 6.75
Unity 8.64 6.99 6.85 -
Unity First Home Buyer special - - 6.45 -
Wairarapa Building Society 8.60 7.15 6.85 -
Westpac 8.64 7.89 7.49 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.89 6.65
Median 8.64 7.45 7.37 6.77

Last updated: 1 March 2024 10:00am

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