First-time homebuyers shell out an additional $ 94,000 to climb the property ladder

First-time home buyers have to shell out an average of nearly $ 94,000 more to climb the property ladder than they did a year ago.

CoreLogic data shows that the median price paid in February for a first-time home buyer was $ 615,000, 18% more than a year ago or nearly $ 93,700 more.

Kelvin Davidson, a senior economist at CoreLogic, said there were signs that early homebuyers were beginning to creak under pressure for ever larger deposits, even taking into account their access to KiwiSaver funds.

“At 22 percent, their share of purchases has dropped back to levels last seen in early 2018.”

Meanwhile, the share of mortgaged investors in property purchases hit another record last month with 29 percent of all property purchases.

February was the last month before loan-to-value restrictions on bank loans were officially back in effect, although most of the major banks had already bought them.

As of March 1, banks were restricted to a limit of 5 percent for new loans to investors with a deposit of less than 30 percent and up to 20 percent of new loans to owner occupiers with a deposit of less than 20 percent.

Starting May 1, the investor limit of 5 percent will increase to deposits below 40 percent.

But Davidson expects investors to face even more restrictions in a bid to cool down the housing market.

“In addition to the restored LVRs, it seems almost certain to us that there will be restrictions on interest-only loans for investors (as well as potential limits on debt-to-income ratios).”

He said the Australian experience suggests that stricter interest-only standards can have a significant and lasting impact on investor behavior.

When the Australian regulator put a 30 percent interest cap on new loans from September 2017 to December 2018, it fell from more than 45 percent to the current level of less than 20 percent.

“This could suggest a change of mind among investors in Australia and possibly a sign of where New Zealand could be headed given that interest loans are still around 27% of the total and more than 40% for investors specifically.”