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First-time home buyers are not letting high home prices keep them from entering the market. The number of them is steadily increasing, reveals a new report.
Politicians and commentators have expressed concern in recent days about the rapid rise in home prices that is squeezing first-time buyers. National has urged the government to “control” the Reserve Bank to stop the flow of low-cost money to the housing market.
But CoreLogic’s inaugural First Home Buyer Report shows that the number in the market is actually increasing.
The proportion of purchases made by first-time home buyers is currently at its highest level since CoreLogic began analyzing homebuyer ranking data in 2005.
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Nationwide, the market share of first-time home buyers in 2020 so far has been 24 percent and was 25 percent in the third quarter alone.
Kelvin Davidson, a senior property economist at CoreLogic, said it was well above the long-term average of 21 percent and surpassed previous peaks of 23 percent in 2006-07.
“It certainly goes against perceptions. People look at the fact that the median house price in Auckland is $ 1 million and think that surely first-time home buyers might not be buying at those prices.
MONIQUE FORD / STUFF / Things
First-time home buyers are in the market nationwide, Corelogic says.
But they are, and across the country. Their market share in each of the major hubs – Auckland, Hamilton, Tauranga, Wellington, Christchurch and Dunedin – in 2020 has been considerably higher than the long-term average. “
The market share of first-time home buyers had increased in recent years and their market share had not continued to increase because other groups of buyers had retreated somewhat.
Instead, the activity of buyer groups across the board had increased, which meant that the market share of first-time home buyers increased because they had become a more important driver of demand and activity, Davidson said. .
There were several reasons for this. One was access to KiwiSaver for deposits. Another was a willingness to compromise on location or property type, resulting in cheaper price entry points.
Additionally, in the post-Covid phase, returning kiwis and future OEers likely contributed to strong demand from first-time home buyers as well.
The report also highlights a notable financial incentive that adds to the benefits and security that come with home ownership, Davidson said.
“We looked at the numbers for mortgage payment costs and found that nationwide, first-time home buyers only pay about $ 47 per fortnight to cover a mortgage compared to the cost of rent.
“In two cities (Dunedin and Tauranga) it is actually cheaper for a first time home buyer to pay the mortgage than to pay the rent, whereas the difference is only $ 6 per fortnight in Christchurch.”
These factors explained the growing number of first-time home buyers entering the market and again emphasized how strong the desire to climb the ladder was, despite the cost, he said.
“The reestablishment of LVRs will not make a big difference to this trend. It may put off some investors, so it could open up a few more gaps for first-time home buyers. But the limited supply means that first-time home buyers are likely to simply end up competing more with each other. ”
The CoreLogic report also reveals that not all first-time home buyers start at the bottom of the property ladder and work their way up.
It found that, nationally, the median price paid by first-time home buyers is $ 565,000, compared to the bottom quartile of $ 430,000 across all buyers.
Westpac NZ’s general manager of consumer banking and wealth, Gina Dellabarca, said the strength of the first-time home buyer demographic indicated by the CoreLogic report was supported by Westpac’s own data.
“We have supported 5,343 clients who buy their first home in their new homes over the past year, which was a 7% increase over the previous period.
“Many first-time home buyers have access to KiwiSaver, and with today’s low interest rates, they can make first-time home ownership a very real and affordable option.”
