Housing Market – First Home Buyers capitalise on soft market – CoreLogic

First home buyers (FHBs) remain a key presence in the property market, consistently accounting for more than one quarter (27%) of purchases, comfortably above the long-term average of 21%, according to the latest CoreLogic First Home Buyer Report.

The report, based on the CoreLogic Buyer Classification series, provides in-depth insights into FHB activity across New Zealand, the types of properties being purchased and the prices they’re paying.

NZ Chief Property Economist Kelvin Davidson said FHBs were utilising a number of different strategies to secure a property.

“It’s never easy to get that first home and stretched housing affordability – despite falling mortgage rates – remains a key challenge.”

“But many FHBs are still proving successful, taking advantage of low-deposit lending speed limits, tapping their KiwiSaver for part of a deposit, as well as showing a willingness to compromise on location and property type.”

“The allure of ‘a foot on the ladder’ clearly remains strong, especially in the current market where house prices are down and abundant listings favour buyers.”

He noted that to date, the Government’s removal of the First Home Buyer Grant scheme has not been a noticeable barrier for the segment.

FHBs are getting ‘good deals’

The latest data shows the median price paid by FHBs has fallen in recent years, from $715,000 in 2022, to $695,000 last year, and $685,000 across the first nine months of 2024.

“That’s despite standalone houses, usually larger and pricier properties, making up a higher share of FHB purchases this year,” he added, pointing to today’s figure of 73% versus 70% in 2023.

“This signals that FHBs are getting ‘good deals’ in the current conditions.”

Mr. Davidson said that despite the strength of the segment, affordability constraints are forcing FHBs to change their behaviour.

“If you go back to 2019 and 2020, standalone houses accounted for more than 75% of FHBs’ purchases, suggesting that as affordability constraints have intensified over the past few years, FHBs have been prepared to change too.”

FHB trends around the country

Looking across each of the regions, the strength of FHBs is near universal.
Among the main centres, the strongest market share for FHBs over the first nine months of 2024 has been wider Wellington, at just short of 35% of purchases. 

Tauranga is at the other end of the spectrum, at 23%.

However, when you compare the latest figures to their historical averages, the relative strength for FHBs is widespread with both Hamilton and Tauranga 7% above normal, with that gap sitting at 5% in Wellington, and 4% across Auckland, Christchurch, and Dunedin.

Meanwhile, a similar margin applies in ‘next tier’ cities such as Nelson and Invercargill, as well as smaller areas including Horowhenua, Ashburton, and South Waikato.

FHB outlook

Looking ahead, Mr Davidson said the outlook for first home buyers, although more challenging than 2024, still looks promising.

“There’s a sense that mortgaged investors may start to become more active again in the next 12-18 months, meaning that FHBs will face increased competition.”

“Nevertheless, it’s entirely possible that lower interest rates will still continue to drive more FHBs in absolute terms.”

He said he expects a proportion of the 20% allowance for banks to lend to owner-occupiers outside the debt-to-income ratio restrictions would prove helpful, especially in the more expensive regions.

“All signs point to FHBs continuing to hold onto an above-average share of property purchases in the next 6-9 months, given other groups including investors are still facing challenges.”