tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Wednesday, June 19th, 6:28PM

News

rss
Latest Headlines

Low house prices and deposits help first home buyers

The increasing number of low deposit mortgages being lent to first home buyers has been borne out by the latest CoreLogic research.

Thursday, May 9th 2024, 9:37AM

by Sally Lindsay

New Zealand Mortgages says five out of 10 mortgages it has written recently have been for first home buyers (FHBs) with just a 5% deposit.

CoreLogic says FHBs are taking full advantage of lower property prices, the availability of low-deposit finance, opportunities to tap into KiwiSaver funds and reduced competition from other buyers.

Low equity loans to first home buyers have been at about 30% since the middle of last year. Their number peaked at just over 40% in May 2020.

CoreLogic’s biannual First Home Buyer Report shows FHBs accounted for 26% of purchases in the first quarter of this year, well above the long-term average of 21%.

CoreLogic chief property economist Kelvin Davidson says since the previous edition of the report in November last year, there have been two mini-phases in the housing market recovery.

“There was a small burst of price growth at the tail end of last year, but more listings became available over the first few months of this year, which has contributed to a slowdown in property values, as conditions swing back in favour of buyers,” he said.

“Throughout all of these market changes, one constant factor in recent months has been the continued strong presence of first home buyers.”

Tricky conditions

As FHBs navigate tricky lending conditions and high mortgage rates, Davidson says they have been taking advantage of the low-deposit lending allowances at the banks, using FHB grants and loans, and in some cases compromising on location and/or property type.

FHBs are paying less for more this year, with the median price falling to $695,000 in the first quarter from $699,000 last year and $715,500 in 2022.

That’s despite standalone houses, bigger properties, representing a higher share of FHB purchases this year, which essentially signals that FHBs are getting ‘good deals’ in the current conditions,” Davidson says.

“Although the median FHB price might be lower than the market more broadly, they’re often not buying the cheapest properties.”

The price being paid by FHBs is significantly higher than the lower quartile, or bottom 25%, of all buyers, where the median price is $565,000.

“It shows 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.”

Trends

The national trends can also be seen at a more granular level with data across Auckland, Hamilton, Tauranga, wider Wellington, Christchurch, and Dunedin recording FHB activity above long-term averages.

FHBs made more than one in three purchases at 36% in wider Wellington, compared to 22% in Tauranga. In Hamilton, FHB activity is 34% and well above its long-term average of 24%. Even in Tauranga recent activity has still been well above average at 16%.

Davidson says this above-average trend is consistent across all main urban centres despite there being a significant gap between the cost of a mortgage and rents.

“With mortgage rates having risen sharply, and even despite a recent acceleration in rental growth, the extra cost to pay the mortgage compared to rent is still quite high,” he says.

“With rent being significantly cheaper it certainly highlights that most FHBs are likely to be buying for reasons such as stability of tenure rather than due to simple financial drivers.”

FHBs are also highly active in the country’s next 12 key centres, nabbing significant market share in many areas.

The highest number of FHBs were recorded in Rotorua, representing 32% of all buyers, while Palmerston North and Invercargill each saw FHBs comprising 31% of buyers. These figures exceed Rotorua and Invercargill’s long-term averages by 9% and 8%, respectively.

Davidson says while it’s difficult to determine someone’s motive to buy in a certain area, it’s likely affordability and lifestyle are key contributors for the surge in FHB activity in many urban areas.

Tags: first home buyers

« Rate cuts needed to lift moodSticky market for investors – first home buyers in control »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend
News Bites
Latest Comments
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News
Most Commented On
Mortgage Rates Table

Full Rates Table | Compare Rates

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 7.74 7.35 6.99
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 7.65 7.25 -
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 ▼7.09 ▲6.95
SBS Bank Special - 7.14 ▼6.49 ▲6.35
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 7.84 7.35 6.99
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.24 6.75 6.39
Median 8.64 7.19 7.17 6.65

Last updated: 19 June 2024 3:59pm

About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
 
Site by Web Developer and eyelovedesign.com