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The New Zealand home heating market is posing problems for early home buyers.
Rising prices and fierce competition have left first-time home buyers scrambling for traction in the housing market, a new survey shows.
Economist Tony Alexander’s latest survey of mortgage advisers shows that first-time home buyers remain active, with 30 percent of respondents saying they are seeing more first-time homebuyers for advice.
While this has changed little from last month’s 27 percent figure, it’s down from the 40 percent of advisers who reported they were seeing more first-time buyers in September.
Alexander said the result could continue a trend rather than fewer first-home buyers showing up after they initially entered the market in June, encouraged by low interest rates and hopes for more listings.
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“However, those hopes have been dashed by falling stock prices, rising prices, and strong competition from investors.”
Feedback from survey respondents indicated that many first-time home buyers were increasingly desperate and struggling to compete with investors and existing homeowners.
Several advisers said Kainga Ora Home Start’s price range limits needed to be lifted as few properties would conform to them, while several said first-time home buyers felt they were being shut out of the market.
However, the survey also saw a decline in investors seeking advice.
While 20 percent of advisers said they were seeing more investors seeking advice, this was a decrease from 34 percent last month.
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The hopes of first-time home buyers are being tested, says economist Tony Alexander.
Alexander said that this result perhaps brought some hope that the recently observed frenzy in market activity could be easing slightly.
“If Fomo (fear of missing something) were really the dominant factor in the market today, we could have reasonably expected this measure to increase.”
Some respondents indicated they were seeing investors back off following a move by several retail banks to reinstate the 30 percent minimum deposit requirement for investors.
But one advisor said investors they were watching weren’t affected by the 70% LVR restrictions again imposed by major banks, as their overall LVR was 50% anyway.
The problem most frequently cited by respondents was frustration with how long banks continued to take to respond to mortgage applications.
Alexander’s survey follows the release of a CoreLogic report last week that showed the share of purchases made by first-time home buyers is at its highest since it began analyzing buyer ranking data in 2005.
Prime Minister Jacinda Ardern told Newshub on Monday that the government will continue to “look for ways to encourage and support first-time home buyers.”
The Labor Party has also previously pledged to continue supporting first-time home buyers through a progressive homeownership scheme.
