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First home buyers' share of the mortgage market has almost doubled over the last five years, while investors' share is down by more than a third

First home buyers' share of the mortgage market has almost doubled over the last five years, while investors' share is down by more than a third

By any measure the residential property market is running hot as we head towards summer, with first home buyers and investors leading the charge.

According to the latest REINZ figures there were 7652 residential property sales in August, which was up 25% compared to August last year - the highest number of sales in the month of August since 2015.

Significantly, the market is hottest in the country's biggest market, Auckland, where 2612 residential properties were sold in August, up a whopping 44% compared to a year ago and also the highest number of sales for the month of August in the region for five years.

Following closely behind were Southland where sales were up 39% on a year ago, then Hawkes Bay and Wellington, both on 32% annual growth in sales.

There were only two districts where August's sales were down compared to a year ago - Gisborne -31%, which is a huge drop, but sales numbers in the district are always very low and can be more volatile than in other districts, and Otago -3% which has probably been hit by twin downturns in overseas student and tourist numbers.

The current strength of the market is also evident in prices.

The REINZ's national median selling price was $675,000 in August,, up 16% compared to August last year, while the lower quartile selling price was up 18.6% over the same period.

That's strong price growth by any measure and was evident in all districts except Nelson/Marlborough where the median and lower quartile prices both increased by just 1% over that period.

Reserve Bank figures show that first home buyers and investors are the main drivers of the market's current buoyancy.

First home buyers borrowed $1.344 billion in new mortgages in August, up 46% compared to August last year, while investors borrowed $1.452 billion, up 42% compared to August last year.

Growth in lending to existing home owners was more modest.

While they are still the biggest group by value, taking out $3.931 billion in new mortgages in August, that was only up 16% compared to a year earlier.

In dollar terms the amount borrowed by owner-occupiers in August was up by $544 million in August compared to a year earlier while first home buyers' borrowing was up by $421 million and investor borrowing was up by $429 million.

That means borrowing by investors and first home buyers combined increased by $850 million in August compared to a year ago, easily overshadowing the the $544 million increase from owner-occupiers.

So there seems little doubt that first home buyers and investors are the main groups behind the current robustness of the market.

That's probably not surprising because they are also likely to be the main beneficiaries of the combination of ultra low interest rates and the removal of LVR restrictions on new mortgage lending.

Owner-occupiers will also be benefiting from reduced mortgage rates but are less likely to be concerned about LVR restrictions because they are more likely to have higher levels of equity behind them.

One of the biggest changes in mortgage lending figures over the last five years has been the increasing share of total mortgage lending taken by first home buyers, largely at the expense of investors.

In August 2015, first home buyers accounted for just 10.5% of new mortgage lending while investors accounted for 33.15% and owner-occupiers 54.7%.

In August 2020, first home buyers' share of new mortgage lending had almost doubled to 19.8%, investors' share had plunged to 21.4% and owner-occupiers' share had declined slightly to 57.9%.

So although house prices continue to rise to what what some may see as stratospheric levels, first home buyers continue to take an increasing share of the market.

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Owners of multiple homes benefit the most. If you have one house, you gain very little from capital gains as you typically buy and sell in the same market.

Yes when I was in my twenties a friend gave me that same advice and I realized they were on to something. They might also have been 'on' something but thats another story.

Actually if you have one house your benefit is negative as the council rates grow.

Incorrect. The cost to run a council is budgeted and then shared by rating based on comparative property value. If the budget is unchanged and all properties rise equally then the rates bill stays the same.

If all conditions in your sentence were true, yes. But since councils actually benefit from this we all know how it works in practice.

No - a very simplistic view.
Agreed multiple home owners do very, very well with (currently a largely tax free)CG.
However, you are wrong that home owner do not gain well from CG.
Just look at the much criticised boomers in their $1.5million dollar mortgage free homes . . . they have NOT put anywhere near $1.5million of their savings into that house.
With CG one's equity is leveraged off the mortgage. You really do need to "do the maths": $100,000 as 20% equity on $500,000 house and 10% GC in say two years (conservative) then that equity increases by 50% so one then has $150,000 equity for the next house.
Yes, some boomers have invested in rentals and have down exceptionally well, but so have those boomers who have just owned their own home.
Find out where your local council's social housing estate is, take a drive around and you will see boomers living off their superannuation, paying rent for very basic simple accommodation . . . . while those who bought their own homes live comfortably in $1.5m houses.

My contention was that FHBs do not benefit the most.
Bit of math for you "Benefit(FHBs) greater than Benefit(People with many houses)
Benefit(FHBs) greater than 0
I have seen your math and confirm both above statements to be true.
I also tried to use symbols but wasn't a fan.

In terms of the equity in the subsequent house, if the value has grown by a comparable amount then the debt required for it is the same and the equity is just on paper. It only benefits you if you liquidate it and very few liquidate their only house to rent.

I wonder how well FHB will do if rates do return to 7%?

Those who have purchased or those who are buying into a market with higher rates?

If interest rates rise the economy is well and truly stuffed. The RBNZ is up against a corner (and chose to lower rates further anyway). They are now trapped - any rise will tank the housing market. Look what happens to the US stock markets whenever the Fed tries unwinding QE.

You are correct . . . agreed: those who invest in rental property do (or have done) very well.
I don't have recent Property Investor Assn survey results, but from past surveys and my observations is that the vast majority of investors only have one or two properties.
I also note that those who invested in property and now retired are the most comfortable.
Those who own their own home are comfortable . . . and those that don't are pretty uncomfortable living in their council social housing.

So you encourage home ownership then not landlord'ism - is that your point?

For my experience, as is commonly recommended, I recommend mortgage free homeownership as part of one’s retirement plan.
I also recommend that one needs some further investment to supplement government retirement support.
I don’t recommend investment property to all - not all have the necessary skills and temperament to be a landlord. For some who have tried it’s been a financial and/or management nightmare.

or if it allows you a massive reverse mortgage in your twilight years.

You tend to get more favourable mortgage rates the higher your equity, so that can benefit owner-occupiers when they re-fix.

Not at the bnz, once you own a couple of homes they charge higher interest rates

Yeah, as you would expect. Investors mortgages are considered higher risk. Hence why i referred to owner occupiers.

Yes you did say that GN... my aim in last 3 years has been to get rid of the mortgage completely but then covid came along and I found myself buying again. Despite having almost the total purchase price in cash and shares (but wanting to borrow 50 to 60 percent) the bnz haven't been overwhelming in their offer

Not surprising . . . despite being contrary to popular belief this shows that banks are being prudent.

These prices are fake. The real estate agents are withholding sale prices that are below CV. This is fraud if you ask me and is creating FOMO among the gullible and naive. In Sydney it is becoming a known problem. How low can these immoral spruikers go!!


"The housing market is booming and first home buyers appear to be the main beneficiaries" - how exactly is a booming market beneficial for first home buyers?? Not sure "beneficiaries" is the most appropriate word to use in this context, "contributors" maybe?


I'm pretty desensitised to media headlines, but I'll admit, this one actually offended me. Not impressed interest.

Reading the main stream media is detrimental to the average Kiwi. Preying on the weak and financially illiterate, like telephone investment scams.


"First home buyers appear to be the main beneficiaries", your headline says.
Really? They are paying higher prices than ever. The affordability improvement from lower interest rates disappears into the greater principal payment, and with more future downside risk attached in the case of rate rises. They're buying in because of FOMO. The 'beneficiaries', if there are any, are those who already own property and can cash up during this rush.

Correct falling interest rate has been offset by high house price.

Low interest is actually harming FHB as more debt and befitting more to investors specially with no LVR limits.


Alright, so given the market is looking so hot when can we expect Orr to introduce those LVRs again? In 3, 2, 1,..... crickets...

Right. Because the interest rate 'lower the cost of debt' tool isn't available to him.

The ruling elite will be hoping that the extension of the bubble can be prolonged as they're terrified of pretty much every other economic outcome and indicator. If they lost the bubble, things would be dire beyond most people's imagination.

Why should we have to imagine a free market? Surely we have the right to actually exist in one. No excess baggage. Survival of the fittest.

I actually agree with you here.
I feel that RBNZ have over-cooked their response (see below) to addressing Covid with OCR cuts and removal of LVRs.
With current level of house price inflation I see the introduction of FLP being delayed beyond November and while RBNZ have signaled OCR will not be before March (as proposed last March) it could be quite a bit later. While it could be that FLP and OCR are not the only tools they have, they seem to have possibly used a lot of the powder that they have.
If house price inflation continues into next year I can see LVRs being reintroduced.
A fine balance between providing economic stimulus and creating economic instability.

Note: RBNZ may have over-cooked their response as the economic consequences of Covid and lockdowns has not been as significant as they and other s such as bank economists were estimating.

Yep, removing LVR's was the dumbest move they have made and boy have they made some shockers. That's why I was on here a few months ago telling everyone to write an angry letter to them, as I did. Their response was pitiful and short sighted in the extreme.

Now we are seeing the results - loose lending conditions and FHB's racing to out bid each others on properties they probably won't be able to afford if anything returns to normal or if jobs are lost etc.

I highly doubt whether LVR removals are "economic stimulus". They might show up like that in the numbers short term, but it's like pigging out on junk food and cigarettes for a year to make you feel good.

" first home buyers continue to take an increasing share of the market"
Really great to see.
Once a FHB, the important thing is not market fluctuations but rather the ability to service the mortgage. FHB buy for the long term (although they may trade up on the same market) so short term fluctuations of even a few years are not significant.
Rather than market fluctuations the critical thing is job and income security and being prudent to pay the mortgage down to offer greater security.
Talking to a mortgage broker (family connections) in this Covid era banks are being far stricter with FHB. They are now looking more critically at employment, continuing to apply a 7% mortgage interest stress test, and consideration of savings record and money management.
Those FHB who were waiting trying to time the market bottom will be paying another $50,000 to $100,000 more for the same house. Their landlords also loved them profiting from the CG and the mortgage being paid down.
Basic rules regarding long term investment apply here:
1. Don't try to time the market,
2. Ignore short term fluctuations, and
3. Be prudent.
Home ownership is long term, and irrespective of short term market fluctuations FHB are doing financially well, and more importantly enjoying the intrinsic value and financial and social security of home ownership.


Home ownership is long term, and irrespective of short term market fluctuations FHB are doing financially well, and more importantly enjoying the intrinsic value and financial and social security of home ownership.

Sounds like wisdom.....suitable for the 1960s.

What a frivolous comment.
It was true of the 1940s, 1950s, 1960s, 1970s, 1980s, 1990s, 2000s, 2010s .....
And we have Nzdan having buying just three years ago being just that . . . . now a "FHB are doing financially well, and more importantly enjoying the intrinsic value and financial and social security of home ownership".
You have some choices in life. To give you something to think about; find out where your local council's social housing estate is and take a drive around this coming weekend . . . . some boomers there living in pretty pitiful conditions existing from superannuation payment to payment.

It was true of the 1940s, 1950s, 1960s, 1970s, 1980s, 1990s, 2000s, 2010s .....

The bubble didn't really start taking off until the 90s. 1940-1990, housing was still largely a consumption good.

The point is that your reality is not going to be the reality for younger generations. The days of cardigan and slippers employment still exists but expect to see a huge shake out. The NZ property bubble framework is not designed for the new reality.

J.C... Yes, Nzdan did well, but got lucky to an extent. If, three years ago, he had instead taken his house deposit to the casino, placed it on red or black and won then taken his "investment profit" and put it all into the two biggest NZX50 companies (by market cap) he would now be a very wealthy multi millionaire. Would you still be expounding his financial acumen? Of course not. Probability and alternative realities are important factors when evaluating risk taking and decision making.

I was gonna say sounds like a verse from TTP but close enough. Should be a ban on "copy and paste" contributions like this. How many times do we need to see the same text regurgitated into every property-related article?

Every time you - and others - post the same DGM negative comments.
Sounds like you are advocating for one-sided discussion.
Cheers :)

I'm not sure what I have said that implies I am doomy and gloomy but if you are referring to my empathy/concern towards the younger generation loading themselves on greater and greater volumes of debt all whilst the RBNZ and successive governments do nothing to address widening inequality and the social ills that are a product of that inequality, then you sir can call me Mr. Doom and Gloom.

I have concerns about current house prices.
The reality is that at a personal level that is the prevailing playing conditions. The moot point is what should a young potential FHB do?
My point is that if a FHB is able to currently afford a house and service the loan then short term (even five years) fluctuations are irrelevant as homeownership is long term.
Sadly, there was an elderly poster here last year - Retired Poppy - who advocated FHB wait, put their money in term deposits and wait for the market to bottom. Well 12 months later those FHB are having to pay another $75,000 plus for the same house and after tax their term deposits are returning very little. Not surprisingly Retired Poppy is now very quiet.
The future of the market last year was less certain than is seemingly this year. The RBNZ has announced FLP which is specifically intended to reduce household borrowing costs . . . . it is not rocket science that from the past decade with falling interest rates and rising house prices and RBNZ has indicated that this is a likely consequence.
For a FHB, to say hold off is a repeat those comments made last year.
At a wider level, yes the current situation regarding housing needs to be addressed. At a personal level FHB have some tough decisions to make . . . and as I say the future short term direction of the house market is irrelevant provided they can service the loan and it could well be expensive for them if they procrastinate waiting for that bubble burst.

Its a bit of a shit sandwich that older generations have created for FHB's eh p8, simply to protect their own arses. We could just allow the market to correct to historically accepted levels of affordability and remove that risk for FHB's so they can experience the same satisfaction and security that was enjoyed by your generation eh? But that would require a sacrifice from a generation of people who appear to have plenty - they tell us on websites like this all the time how well they've done! Why not a little charity then and remove the stress from younger peoples lives by allowing a reset of the housing market?

I need to clarifying something for you to which I have previously posted on.
This is not about my generation protecting their "arses" - in fact its a pathetic baseless blame-shifting shot.
It is also not about being a spruiker - but rather the reality of where I see the market heading.
Please note that - "the reality of about where I see the market heading".
As I have previously posted; I see a continuing short term rise in the market due to the low and likely lower interest rates and the current momentum in the market. I see RBNZ comments on economic stability by continually to reduce interest rates will as a consequence this will provide support to housing as Orr has admitted. That is seemingly the reality whether one agrees with RBNZ actions or not and that is what I consider as to the future of the market. That view is also consist with bank economists such as Westpac.
A big unknown is the future around Covid along with RBNZ and government action and that is probably the biggest uncertainty which could affect prices in the short term.
However, as I have previously posted, in the post-Covid and economic recovery period (reducing debt etc.) I can see - or would like to hopefully see - RBNZ and the Government addressing the disjoint between incomes and home affordability. So for that reason, in the medium to longer term I see the possibility of some correction (such as the 5% estimated by Treasury) and the likelihood of a a fairly long period of flattish house prices as a new norm in which price volatility of the past decades will be historic memory. So yes, house prices are likely to return to historically accepted levels of affordability.
However the further one looks ahead the less confidence one has in their estimation.
And yes I have often posted about the need for an economic reset to that which is currently based on Rogernomics and one Robertson hinted at the time of first Covid action but seems to have forgotten. And, yes as I have posted many times, current housing affordability issues is not consistent with NZ values that I believe in.
You have often posted about Shiller and the impending bubble burst for the past five years. Well USA and Ireland pre-GFC were quite different both then and now to conditions in NZ. For five years, it was your decision to rely on belief in Shiller's bubble burst. Meanwhile 80,000 mortgages (140,000 people) including the likes such as Nzdan, Carlos and Fritz decided within the last three years to buy and are now reaping the benefits.
Being blunt here; your decision was seemingly based on a belief of Shiller and bubble burst . . . so accept the consequences of that choice and stop blame-shifting. As for need for a little charity . . . stop bleating and join the reality of the real world. Part of that reality is that future generations will be wearing the current economic stability costs of Government Covid action for your and others benefit. . . life is not always fair and not always all about you.

I actually do wish you well; but to be honest, you really do need to start looking about the realities of what is happening rather than being besotted with a theory which may or may not be applicable to NZ.

printer8,,I think I saw you hunched over the roulette wheel at Sky City last night. You had a little card showing results of the previous spins and you were using it to "forecast and predict" future results. Later I saw you walk out past the taxi rank and stand at the bus stop. Hope you got home OK.

IO, You make it sound like they had a choice.

Everyone has choices and with all choices there are costs.
For instance, if one wants to live in Auckland that is a choice which has a cost regarding housing affordability. Many potential FHB have decided to move to the provinces - or overseas - to get onto the property ladder with the intention of eventually returning to Auckland.

Printer8, that was a reply to the previous comment, not yours. And perhaps not clear...

Who voted for Labour in the last election? Has housing adjusted as promised? It's not like older generations conspired to get the current results.

When you say 'they' who are you referring to?

The older generations. See comment 5:52pm above.

Just to understand the framing of this correctly - you're claiming NZ'ers didn't have a choice or the abilities to prevent a housing bubble?

I'm saying that house prices (/land) have continued to pump higher regardless of which party people voted for over the last 20 years or more. The most recent election is a perfect example of that - so if you're going to blame past generations for the effects their votes caused you could just as easily blame current voters including 22 year olds that voted for the current Government, as house prices have continued to increase.

Yes you could 'just as easily' if you didn't want to look very hard or take responsibility for anything. Was it those who died in WW2 under Hitlers rule that were to blame, or was it those who allowed his rise in the decade/s prior? Its not a black and white issue, its subjective. But generally its best to try and put out a fire when its small, than when it becomes too big to handle. But its unfortunate that like the rise of Hitler, when the thought of improving ones personal position, but forgetting the second or third order consequence of that, that society can degrade and fall in upon itself. Should one take responsibility for that self interested position, or simply just blame others for not being as selfish?

To clarify, I'm not of the "older generations", but I know many of them and they weren't purposefully trying to screw over younger generations. Boomer bashing isn't helpful. It's better to focus on solutions.

Please re-read the initial comment then - I don't single out 'boomers'. You just did. And I was focused on the solution by saying we need to allow house prices to reset to affordable levels. But we have repeatedly failed to do so, mostly because older generations don't want to see a fall in the price of their assets.

Tell me about your solutions?

"Its a bit of a shit sandwich that older generations have created for FHB's eh p8, simply to protect their own arses." - sounds like boomer bashing, even if you're lumping in older generations as well.

A reset would wipe out FHB and upgraders from the last 2-5 years and cause more harm to the economy.

In my opinion it's best to avoid a substantial drop in existing house values but instead improve affordability through some combination of:
- build more affordable homes (build up in city centres, free up more land, reduce regulations and bureaucracy)
- inflate away debt, boost net wages, devalue currency to remain internationally competitive

So engineer static/rising nominal house prices but lower real house prices.

Sounds more like Michael yardney

I try and watch his regular videos .. how about you.

"3. Be prudent." - that would lock out most FHB's from buying a house in Auckland for example. But I guess it depends on what 'prudent' means to you. To me it's 20%+ deposit with DTI <5. I wonder how many FHB's fall into that category...

"3. Be prudent." - that would lock out most FHB's from buying a house in Auckland for example. But I guess it depends on what 'prudent' means to you. To me it's 20%+ deposit with DTI <5. I wonder how many FHB's fall into that category...

'Prudent' (to me) would be 30% down with no more than 3 years of earning ability as well as the ability to cover living expenses for 12 months with no income.

...and I thought I was being insanely conservative and risk-averse. I wonder what house prices would be if 30% deposit and DTI <=3 was enforced... ~200k median?

Court Jester
Not a problem. You are risk aversion . . . your choice, no problem.
As posted, you could afford that $1.5 million house . . . however, in the last year it just got about $140,000 more expensive.
Silly me . . . of course the return (after tax) on those shares of yours and savings from income (after tax) was more than that.

It is not matter of how much one can afford, but what is the actual value of an asset, we would rather use the extra cash from that $1.5 million house to produce something of value, which may create extra jobs and boost the economy instead of crippling ourselves in debt for the rest of our lives right? Same as this applies to oneself can be applied as a country.

So tell me how many 'prudent' FHB's could afford to buy in Auckland now? Or just tell me what being prudent means in your opinion, in LVR and DTI terms.

I think I have clearly indicated what I mean by being prudent:
- Considering one's job and income security and ability to service the loan (both of which the bank has taken into consideration).
- Paying down the mortgage as much as possible to provide a buffer from unexpected shocks . . . which may not be about interest rates or house market but also shocks at the personal level.
As to how many "prudent" FHB there are in Auckland . . . I don't have the data. However RBNZ data says 80,000 mortgages have gone to FHB (140,000 people?) have bought home in the last three years and I'm sure many of those are in Auckland and reports show affordability improving.
What does "prudent" mean in terms to LVR and DTI . . . well banks are risk aversion and they are not imprudent to lending. As I posted a couple of months ago . . spoke to a mortgage broker (family connections) from Auckland post first Covid lockdown and her comment was that banks were looking very carefully at all the risk factors - employment security, savings, deposit, house value etc.

But there again, as you have posted you could choose to buy that $1.5m house if you wanted . . . or that cheaper one as you prefer so all of this isn't an issue to you. ;)

But there again, as you have posted you could choose to buy that $1.5m house if you wanted

Stupid to have $1.5 mio wrapped up in a NZ house right now.

Many houses out there selling well above $1.5m . . . . and the buyers aren't all stupid, and in fact most have proven to very astute to be able to afford that $1.5m plus.

Many houses out there selling well above $1.5m

Don't care. I said it's stupid to have this kind of capital wrapped up in a NZ house, for individuals and for the nation.

I can see that you really enjoy talking about my financial situation. Since that's the case, let me use that as an example. See, I'm being *prudent* by not buying a house for $1.5 million despite having the means to do so. I simply wouldn't feel comfortable with DTI over 5. This is what being prudent means in my book.

And I'm not buying anything around $1 - 1.2 million now because I want to live in a specific area, in a good quality house, and there aren't many options at that price at the moment. Why would I buy a house that I don't want to live in? In that case that *intrinsic value* you keep bringing up is just not there.
There, I hope this satisfies your obsessive curiosity re my personal situation.

Firstly, you put that information out there for discussion.
As to what you want to do based on your level of risk aversion and as you have previously argued you see shares as being a better investment and return . . . well that is fine, its your choice.
But it is worth noting that the $1.4 million house last year is now $140,000 more expensive and signals from RBNZ is that a consequence of their economic stimulus houses are most likely to increase.
As you have argued that you investing in shares is far better option, well . . . ????? Your choice, but that house is $140,000 more expensive already and likely to be more next year.
My comment is that those last year who cried bubble burst and advocated waiting are most likely worse off . . . and the out look for the next six months to a year is the same.
The future of the market is irrelevant to those who act now . . . but those who procrastinate . . . well?

You keep contradicting yourself. First of all, you just said FHB's should ignore short term fluctuations. So why do you keep bringing up that this year house prices are up compared to last year?
You said it's a long-term investment... then you talk about the intrinsic value of having your own home. So is it a home or an investment? It's not really both, since if you sell it at a higher price, you also need to buy a new one at a similarly higher price.
Make up your mind.

The idea is to only promote information that resonates with the confirmation bias.

p8, what's aggravating about your comments is that you think those of us who aren't buying property are just lazy or stupid.
The truth is that WE CAN'T because it's TOO EXPENSIVE. Check out what the median income is and how it compares to house prices.
What you're doing at the moment is like walking into a school for the blind and shouting at them WHY DON'T YOU JUST USE YOUR BLOODY EYES

And the blind children raise their voices, but the man who talks to much is deaf. They say, why don't you use your ears?....

The deposit is hard to raise, i'll give you that, but the figures you need to look at are the weekly/fortnightly/monthly costs of servicing the mortgage, and at 2.5%, they really aren't that bad (less than $100/week per $100,000 borrowed). So bust ass for a year or three and get a deposit together, then buy.

Rents are going to keep rising so long as we have inflation targeting and a govt that supports the rental market with accommodation supplements, mortgage payments not so likely to rise, unless we get high inflation, and even then so long as wage inflation keeps up with CPI inflation, that's a good thing if you have debt, it helps pay your mortgage off for you. The real worry is stagflation.

I had three freehold houses and land in Akld and sold the lot 5 years ago. Having been a very profitable, totally risk neutral gambler for over 20 years I simply used probability and my two good eyes and deemed that the risk reward was just not there. Maybe P8 is only using one of his eyes?

Don't bother with risk and probability with p8. Anything that doesn't match the paradigm of house prices double every 10 years, or housing is a risk free investment that can never fail, simply falls on deaf ears. He can't handle possible outcomes, like house prices falling by 50%. And if a possible outcome hasn't happened (yet), it means that you're an idiot and were wrong...even though said outcome could still happen and the risk is worthy of acknowledgement.

...and I thought I was being insanely conservative and risk-averse. I wonder what house prices would be if 30% deposit and DTI <=3 was enforced... ~200k median?

Not really. Good freestanding home in a city like Columbus, Ohio is USD200K-300K. That's only a deposit of $70-100K. Salary of $70-100K. And min of $70k in cash and other liquid assets.

and you can lock in your interest rate for 30 years, thereby massively decreasing risk. I am waiting for a Vegas crash worse than 2008 to invest.

Yip, I lived through the housing crash in the states in 2008. What's going on here is completely insane - it looks like a bubble on a bubble (i.e. we didn't deflate in 2008 like other countries) - the downside risk is potentially much much higher than most are willing to acknowledge. I've said it before and will continue to say it, that a 50% drop in house prices in NZ wouldn't surprise me. Not saying its a certainty, but its a possibility.


What a complete lack of empathy!

I assume your comment is in relation to my post, so please explain why.


I am sure you understand the negative effects on peoples lives of ever increasing housing prices when they are decouple from incomes. This is cause of very serious health and social problems and it is not a joke. When you celebrate FHB getting into this market as if it were matter of winning a lottery ticket for them you are showing everyone how little concerned you are about the issues behind this.

I have previously posted many times that homeownership falling from 65% to 35% over the past 30 years for 25 to 35 year olds is inconsistent with NZ values and it is not what I want.
However, it is great to celebrate those that have bought a home and that is what I am doing. I find it hard to understand why you would not want me to do so . . . and as I have posted short term - even five years or so - fluctuations are irrelevant.
Your comment simply sounds like that of a Quade Cooper. Is it a "matter of winning a lottery" . . . no, but they are not losers.
The current situation is reality and you have some choices.

Why did you bother, I wasn't expecting an apology.

And you didn't get one. :)
If you are a potential FHB, I wish you well and I appreciate the difficulties.
I know that you will be dismissive of this.

I must be a FHB because I care about them, this just confirms my initial point.

printer8 .....I have read many of your posts now and have deduced your "enthusiasm" for anyone now to go out and buy a property and then to "congratulate" them, whether a FHB or their first or next investment property, is purely based on the fact, like all "ponzi schemes" you need further "players" coming in from the bottom.......while you know very well when prices (in Auckland) are so "out of whack" with what a majority of FHB buyers earn (without any help from the bank of mum & dad)

I know people out there in their mid 20's with children, who both work are just struggling to pay the rent ......while the taxpayer is forking out for the accomodation supplement, going straight into the landlords pocket.

The property market to me is just a "rigged" ponzi scheme, with even the govt. pushing it along ....while the only true "winners" are the banks.

You continue believing in that.
However me; I have nothing to personally gain and don’t believe I can or have had any influence on anything like the 80,000 FHB mortgages (140,000 people?) over the past three years.

@Printer8 .......I will continue to believe, that why should the Government, to keep this "ponzi" scheme going, have to prop up people's rents with taxpayer money, through the accommodation supplement, which goes straight to the landlords pocket, while in fact you and your ilk like to say we have a "free market".

I would not mind one iota if my taxpayer $ was going to support new tech and IT businesses etc (of which some may or not make it) but at least it wouldn't be going to a small group of people, squeezing the financial life blood out of everyone else, just so the rest of us can have the basic need of a roof over our head (whether renting or buying)

If your "strategy" of getting all and sundry, to buy NOW at what ever COST was working, why have home ownership rates fallen ?

Step right up folks, to the greatest show in town, the House of Cards! Will you make your fortune or get screwed by negative equity?

P8..would you have rather bought an Akld house in 1975 or 1980? (38% real drop). Oh sorry, mixed the dates up there, I meant 2021 or 2026? Call me stupid, but my choice is to wait.

totally agree, those shiny titles make me feel sick. When in 10 years this country turns into 3rd world country with polarized society , everyone involved in this current market will be in charge, even FOMOed FHBs because what they need to do is just NOT buy a house for about 2 years and market will correct as they are important cog in this mechanism. Not even talking about RBNZ's actions . Surprisingly , I am NOT blaming the govt and I think it does not matter any longer which party is ruling. Slowly but surely killing NZ as we knew it. Soon , it is going to be 15 or even 20 yearly incomes to buy s*tty apartment . So called Hong Kong style , ask yourself , even if you have 4-5 properties !! Do you want to live in the NZ which will become new South Africa or new Hong Kong????

I've been saying from the beginning Venezuela. And I'm sticking to it. We will become Venezuela.

And who would be concerned about the ability to service a mortgage during a global pandemic and record recession. It's not like the FHB demographic is more likely to face a redundancy.

How exactly are the banks looking more critically at employment? All they needed from me was a couple of pay checks.

Portland, did you borrow recently? Only 3 months paychecks? There have been a lot of reports that banks are wanting 6 month bank statements and going through line by line.

I currently have an approval, 3 months only. Less than a year with current employer..

* sorry it was not 3 months pay cheques, but last 3 pay cheques which is only 3 fortnights.

That is my understanding talking to a (family connected) broker.
For a bank requiring less would mean having a very sound knowledge of the person and proposed LVR would be quite high.

And who would be concerned about the ability to service a mortgage during a global pandemic and record recession. It's not like the FHB demographic is more likely to face a redundancy.

How exactly are the banks looking more critically at employment? All they needed from me was a couple of pay cheques

Against all logic house prices are off to the races again. The leading cause is now everyone knows for sure that interest rates are going to FALL even further so its now approaching free money. Mortgage interest rates will be 1.75% next year from March-April its a given as its the only tool in the box for the RBNZ to keep the party going. Cheers.

There's no need for lowering rates even further, instead of more debt on mostly already overpriced assets we need liquidity in service and retail sectors but the RBNZ seems to not to understand that simple concept, this or they are deliberately trying to cripple the working class in favor of asset holders.


Like Lambs to the idea of what's ahead of them.

Some might, but I assume confirmation bias has clouded their judgement, as well as FOMO


Selling for much higher price and telling the buyers "you've secured yourself a bargain" despite how crappy the product is. Yes, we are living in an era of media manipulation.

These numbers from REINZ contradict those from more independent sources such as CoreLogic.

Leaving apart the total nonsense about this benefiting FHB, we should really be warning people about not getting into the market right now, that would be an exceptional exercise of analysis and journalism.

Congratulations to all the new first home buyers.

but mainly to the savvy investors who offloaded their assets on time.

Savvy investors don’t sell, especially just before predictable price rises

investors with negative entropy? :)

These comments remind me of a few real estate investors I talked to in the US who got demolished during the GFC. Over confident that past price rises would continue forever into the future.

Yep, I saw the exact same behavior too back in UK, Ireland, Spain and Portugal in 2008, once you are so self-absorbed into capital gains and easy money it gets hard to see the the rest of the economy around is giving you the exact opposite signs.

Its pretty painful to watch eh....Its mostly the arrogance an lack of awareness of how much future pain this can create that many appear to miss.

Goodonya MadMax .......hope to see you at that next auction bidding up to the MAX for that sh*tty cold Mt Roskill 3 bedder, as if you are so confident in these "price rises" put ya money where ya mouth is ! :)

Those investors are the opposite of savvy, unless of course they are retiring or buying property elsewhere. They are basically a charity - gifting their future capital gains to those savvy first home buyers.

we need more first timers to load up on credit .... otherwise this horse falls over
You cant lose now
id suggest allowing our (NZ resident only) sheep to access bank credit
then watch this baby take off
Houses to infinity

...not this "Horse" ham n eggs .....left the 'ponzi party' years ago ......niiiiiiieeeeeegggghhhh !!! .....while there are the remnants still at the "party" who are going to wake up with a huge financial hangover "egged" on by p8 and their ilk .............niiiieeeeeeeeggggggghhhhhhh !!!

I am pretty amazed at the number of MPs who do not own a home... whats wrong with these guys, they are on relatively high incomes. The mp for epsom before becoming the mp, he spent his free time traveling and had no inclination to buy a home. His excuse now is that he can't afford a house in his electorate... so buy one in another area and be a first home investor. I know some older people who for various reasons are renting and would love more than anything to be in a home they own. But they have got too old to qualify for a mortgage and are snookered.

Flying the risk of sounding racist it may well be a Chinese snooker, a phrase conspicuously missing from the Crucible this year in these sad PC times.

In a gathering hosted by an Indian colleague out of 10 people who owned house, 7 have just bought another house based on equity created by first home recently and other 3 were also actively looking to buy another house (100%) and while talking to them, it seems that most of their friends or people they knew too were doing the same. This reflect the herd mentality that is been followed (at least saw it in Indian community).

Most are on to buy their second home as is possible with no LVR and low interest rate.

So now the pressure is not only on FHB but on people already having a house to buy second home - FOMO

Am sure many must have observed this new trend and it happens but was surprised how this has become a trend and everyone keen jumping into it.

Yes I have heard of a lot of that happening in the Indian community.
But the property religion is not bound by race, it seems to convert people of all races and cultures in large numbers.

'Appear' is the key word in this headline. And as we know, appearances can be deceiving. If we're now set to do a Japan with a decade or more of stagnation ahead of us, I'd argue investors who are getting out of the market are the real beneficiaries. Buy low, sell high...

As for the comments about not worrying about timing a market. I would agree with that logic if using dollar cost averaging...which one can do in share market investing. But when buying a house, that is a massively leveraged investment, timing is critical and we have an entire generation who assumes that prices only go up and think there is no downside risk! Buyer beware I'd say...Go ask people in Japan, Spain, US...about whether timing the market is important when coming to buying real estate - they're likely to tell you a very different story than the typical NZ baby boomer who is so lost in his/her own confirmation and recency bias that they can't see the forest for the trees.

Earlier it was correct when they said that FHB should not try to time the market BUT not in this market for sure.

RBNZ and many reserve banks are just following each other, as also they do not know what else can they do -have run out of ideas and they themselves are not sure of the outcome of their actions though they have seen what happened in Japan but still following the same path shows lack of intelligence.

I would agree with the 'don't time the market' concept with housing when pricing was rational. And if you look at the inflation adjusted prices of housing going over 100 years I would agree that this concept was true until about 1995-2000. Prices were flat at an inflation adjusted index. Since then, house prices are in a bubble so if that unwinds, and you're a new entrant to the market, it could/would have life altering ramifications. I.e. you're deposit you've been saving for 10 years or more could disappear in 6-12 months and if its a Japan type situation, it could never recover! Gone. Ouch....What's going on with housing isn't normal - why else are we having these conversations? I don't recall any of these conversations prior to 2005'ish? i.e. risk of a complete crash that would be significant enough to take down the entire banking sector?

do you really think they don't know what they are doing, to me it is looking like they know very well what they are doing , It is the thing that now a lot of people who previously did not have any idea now understand what they are doing.

Hi Greg, The heading : PROPERTY - The housing market is booming and first home buyers appear to be the main beneficiaries...

Is not correct as FHB ARE NOT beneficiaries but have fallen/trapped by FOMO created. As now more in debt by average 16% more than last year though interest rates are low but now have more debts and at time where future is uncertain, do not think RBNZ is helping in playing on FOMO and helping to get more debt.

Your thought in this uncertain time, Is it advisable to tempt FHB to borrow more and more ?

Now RBNZ has no choice but to run the QE and stimulus like mortage defferal till eternity or till economy bounces back as will held them to ransom by their doing and they have no choice but Being allowed to be blackmail to avoid bloodbath as hyper bubble is getting bigger and Bigger.

Accidently reported. Need a confirmation or for it to be moved off to the side.

It's pretty simple really and it's all about maths. The majority of kiwis own property or are social housing tenants. Less than 35% of kiwis fall outside this. I am sure that is a big reason why NO political party in power has taken housing remotely seriously in the last 20 years.
It might take another 10-15 years, when this % increases to more than 50%, before it's taken seriously.

The dirty little secret (which is becoming less of a secret by the year) is that NZ'er have an ego attachment with the CV of their house! Politicians feed that ego and they're loved for it. Watched John Key transform his views while in office as he could see the political benefit of promoting CV increases. We've gone mad but likely won't wake up to it until the pain really sets in. Until then, its FOMO and ego attachment. Fear of missing by FHB's and ego/greed from the 45+ year old cohort. All I can' say is that we deserve the lessons that will come as a result of pumping our housing market so high - no country has ever benefited from expensive housing in the long term. Its always failed.

Agree. And I think there's still a good chance a significant correction (at least 15-20%) will occur by the end of 2022. But we will have to wait and see.
It's such hollow and unsustainable politics isn't it? Avoid doing the hard stuff because it's easier and politically more rewarding to just keep pumping the housing bubble...

People get the politicians/policies they deserve under a democracy...if we think our politicians are a particular way, its just a reflection of our own values...

Yes exactly.
Scary then what Trump tells us about the American people...

In other words, it is political suicide because the majority of New Zealanders aren’t stupid enough to support land tax, which would do little but turn the country into a nation of tenants, serfs to the landlord government.

If you haven't noticed were already turning into a country of tenants/serfs. Just to landlords who are getting bailed out by the government.

One way to do it much quicker is to implement TOP’s policy and turn everyone into a tenant paying rent to their government landlord.

Or we could reverse the tide by addressing the actual problem, being supply. The only demand side factor that should be considered is immigration.

What are your ideas to rectify supply?

Reform the RMA to reduce planning restrictions and administration. Increase funding for council infrastructure for new development. Private insurance and inspection process for building consents. Well-resourced government agency to audit and approve new building materials/systems. 100% of KiwiSaver can be withdrawn for new builds. Create a written NZ constitution, with the first clause specifying that land shall never be taxed.

As much as I think Kiwisaver should be left alone the idea of being able to use it for new build purchases ONLY does seem to have merit.

No the only demand side that is relevant is credit growth, but we know what will happen if that tap gets turned down and it isn't pretty.

Got an email from Barfoot agent and why is he saying price rises slow - if 16% is slow what.....

Property Update - Auckland Properties Sales Numbers Rise Significantly, But Price Rises Slow

..we have very tight supply. People who would normally trade up and too nervous to - most home owners are hunkering down not prepared to trade up. So those that are buying are in the fomo mindset, hence paying stupid money.

Next step is those that must sell. Expect a trickle, might take months to actually see (forced sales don't take place overnight, they take months and months befoe the banks are ready) .

Just vote TOP.

What a pathetic sad bunch Kiwi's have become. Boringly fixated with sh##t box bloody houses.

And yes I have property.

Wasted vote, other than the fact it deprives the Greens of one.

Said it before, say it again for your benefit. Nine was wasted on the Nats to do something. 3 years just wasted on Labour.

That's 12 years min of wasted vote...not to mention years and years of deliberate house spruiking policy prior (an economy based on housing flipping does not occur by accident in case you haven't thought this one through).

Time for you to wake up that it is voting for these main stream property owning self interest politicians that is wasted.

Vote ACT or Greens if you think Nats/Labour are ineffective. TOP votes are discarded for all intents and purposes. Not everyone thinks Nats/Labour are ineffective at implementing policies they personally care about, and for those people a vote for one of the major parties certainly isn’t wasted.

Why vote ACT? They won't be in power, that's a wasted vote. So is voting National, they won't be in power either.

In fact, we should only vote for the party that is leading the horse race at any one time right? Brilliant plan...

Firstly, because there is a distinct possibility that they will form part of a governing coalition. This possibility does not exist with TOP - almost zero. Secondly, because they will win seats in parliament, the more votes the more seats, and the ability to hold the government to account even if they can’t form a coalition. One example - ACT’s euthanasia Bill made it to a referendum even though they aren’t part of a governing coalition. TOP’s votes on the other hand are discarded and don’t contribute to seats in parliament.

Think about it - if everyone that would’ve voted for TOP stays in bed instead, the election result in terms of parliamentary seats will be exactly the same. Literally no difference. However, if every ACT voter did the same, the makeup of parliament would look distinctly different.

Respectfully disagree as you are only looking at the success factor, not the negative factor. By voting for TOP voters are showing they also aren't interested in other parties policies and recognise them as such. Sure they might not have any parliamentary representation, but if they get say 3% of the vote, that's 3% that is not added to other parties power. With Labour in the high 40s, that might be the difference between Labour governing alone or having to make a coalition.

As TOPs policies are so different to everyone else's (i.e based in evidence, not ideology), they can be considered a protest vote for evidenced based policy rather than ideological nonsense particularly from the 2 major parties.

TOP not ideological? lol, thanks for that laugh.

I disagree with all of this. Particularly your claim that TOP’s policies are evidence based. For example, their view is that fresh water ownership rights should be determined based on race. Please explain to me what evidence this race-based policy is based on? Moreover, their social and economic views are the same far left ideological-driven approaches offered up by the Greens.

Never heard of the Treaty of Waitangi? You can disagree with the decision that it is treated as taonga under Article Two of the treaty, but that's not what has been decided by courts. This is evidence.

Regarding ideology, we can continue down the current path of welfare traps where more than half the population is on government subsidies with enormous complications on how to calculate it. Or we could just switch to a clearer system that takes dramatically less government oversight to administer and gives people freedom to choose, no questions asked and encourages people to work (even long term unemployed). Less government/high freedoms/more efficient work force is completely what ACT voters should want so is very right wing. At the same time it sounds very left wing as it gives money to people for free. Guess what? It's neither... based on evidence from studies and UBI experiments.

UBI sounds lovely to many voters, but why are TOP less keen to publicise that they want to turn us into a nation of leaseholders renting our own land from the government? Or that they want to allocate one of our most precious resources based on race? Or that they don't just want to tax land based on imaginary income - they actually want to tax all major assets based on imaginary income, including productive capital like farm equipment? The self-confessed regular and ongoing illegal drug use of TOP's leader may have something to do with the irrational nature of their policies.

Voting for a party that fetishes complex unworkable perfect-is-the-enemy-of-electable policy for the sake of what can only now be assumed is a victim complex is a waste, unless you get off on that sort of thing.

The reset we need won't come from a big party, but it won't come from economists posing as political whizzes either. It will come from something far bigger and outside our borders. We've missed the boat to have any real say in how big it is and how bad it gets.

A key driver of house price increases is demand by citizens using an investment property as retirement savings. This is because NZ's other retirement savings options are heavily taxed in a draconian way, out of step with Australia, Canada, USA and the UK. Accumulating a reasonable retirement sum by means other than residential property is impossible for the average worker. A govt that introduces capital gains taxes in NZ without removing taxation of other retirement savings options will condemn the average NZ citizen to poverty in retirement. Current superannuation payment amounts are also woefully inadequate.

Customers ignoring banks call

Beautiful. At 1 min 20: "...That's what ghosting is..." - way funny.
Also from Oz, DFA site had a vid a couple of days ago heralding in the arrival of "time to sell" letters from banks to Oz mortgage deferrers:

The slowly unravelling ponzi.

Funny how people think this site is full of DGMs and this is in isolation (i.e. an outlier and not the narrative/reflect of general views of society)...the comment section of that link is very doom and gloom!

Can someone run the numbers for the cumulative year to date? Its no point comparing this August to last August as this year is not a normal year as the housing market got shut down in March for months. I'd hazard a guess and say that the total number of homes sold in 2020 is about the same, or probably less, than in 2019. Therefore all we are seeing is the result of the market opening up after lockdown and clearing through the backlog of demand. Supply has been limited as investors couldnt evict tenants from homes and provide vacant possession to buyers until this month (being the 90 days notice from the end of June when the Covid eviction freeze expired).

Its a bit Pollyanna Greg, this constant dripfeed of "look how much money people (havent) made".

"FHB's share of the mortgage market has almost doubled"

Have you ever checked and confirmed that with the number of FHB grants issued?

Not all FHB use grants, most can't, so there is a very low correlation between the number of grants and the number of FHB. FHB stats are in the RBNZ c31 data.

I believe those caps haven't moved in a number of years now. There's effectively no point in having them in Auckland anymore.

Yep, $600k for an existing and $650k for a new build.. in Auckland? Its a joke, or a two bedroom townhouse closer to Hamilton than the Skytower.

Greg Ninness....given the current trends continue, how do you see the ratios in your article changing in the second half of the decade? Many young readers not yet in the workforce are interested in this and (to my knowledge) it is yet to be addressed. Thanks for responding.

Housing shortage + house price increases + shift in home ownership rates in AKL = more landlords and higher rents, National sold off a lot of HNZ housing stock under Key so again rents went up

If just 35% are looking to buy and the majority are existing home owners or subsidised or free social housing
interesting question is what is the social housing bill increased to?
and what would happen if the housing subsidy were lowered?

Housing shortage + house price increases + shift in home ownership rates in AKL = more landlords and higher rents, National sold off a lot of HNZ housing stock under Key so again rents went up

If just 35% are looking to buy and the majority are existing home owners or subsidised or free social housing
interesting question is what is the social housing bill increased to?
and what would happen if the housing subsidy were lowered?