The number of first home buyers getting into a home of their own is heading back towards pre-Covid levels

Property / news

March sales to first home buyers up 7.7% compared to March last year. Prices higher, mortgages bigger than pre-Covid

29th Apr 23, 5:00am by Greg Ninness

The number of first home buyers getting into a home of their own is slowly heading back towards pre-Covid levels.

March is usually one of the busiest months of the year for residential property sales, including sales to first home buyers.

According to the latest Reserve Bank figures, mortgages were approved for 2273 first home buyers in March this year, up 7.7% compared to March last year. That's heading back towards the 2457 approvals to first home buyers in March 2019, before the Covid outbreak.

However first home buyers are paying much higher prices and taking on a lot more debt to get into a home of their own now than they were in 2019.

Interest.co.nz estimates the average price paid for a home by first home buyers in March this year was $661,326, compared to $485,518 in March 2019.

That's come back from a peak of $717,724 set in April last year, but is still up by $175,808 compared to March 2019. The higher price means taking on a lot more debt.

The average size of the mortgages approved to first home buyers in March this year was $547,734, up from $406,593 in March 2019.

However the figures also suggest that first home buyers are being slightly more conservative in their borrowing then they were pre-Covid, or perhaps it's banks that are being more conservative in their lending.

Of all the mortgages approved for first home buyers in March this year, just over a quarter (27.4%) were low equity loans where the borrower had less than a 20% deposit, compared to more than a third (35.4%) in March 2019.

However the number of first home buyers taking out low equity mortgages may start to creep up again over the next few months because the Reserve Bank is proposing to slightly ease the current loan-to-value ratio (LVR) restrictions on mortgage lending.

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49 Comments

by nktokyo | 29th Apr 23, 7:05am 1682708744

Wages are higher too. Try to report all of the apples with the apples please.

by Jamin | 29th Apr 23, 8:58am 1682715507

Yip. All house price reporting should also be inflation adjusted.

Not saying there isn’t a story here, but proper inflation adjusted numbers are always less dramatic when discussing price rises.

by swingtrader | 29th Apr 23, 11:43am 1682725407

If these people lose their jobs they may not get the same salary and they had before. With massive migrant surge salaries are going to soften. My partner was told months ago by a recruiter to stay in his job because he won’t get what he’s on now.

by Fossil Lover | 29th Apr 23, 7:58am 1682711887

More money creation (new loans) for consumption, without the rise in productivity. Fuelling inflation. The new norm is 7% inflation, as the expert economists report, but for the common wage earner and renter struggling to feed the kids, it is way higher.

by Pa1nter | 29th Apr 23, 8:01am 1682712060

Maybe kids will go back to being a source of income rather than a cost centre.

by nguturoa | 29th Apr 23, 8:42am 1682714532

Keep on piling up the donkey until it's back breaks.

by Shaft | 29th Apr 23, 9:09am 1682716155

Ah my son🙏, " but if the back doesn't break is the donkey not stronger,,?"

by Jamin | 29th Apr 23, 9:02am 1682715761

Prices falling, wages rising, interest rates peaking and inflation going strong. This equation is getting better fast for first home buyers………well for the ones with enough spare cash to save a deposit.

by HouseMouse | 29th Apr 23, 9:11am 1682716286

And your last point is the critical one. Housing still remains profoundly unattainable for a large proportion of FHBs, and that will continue to limit their influence on the market, until both prices and interest rates fall further.

And getting a deposit is one thing- affording the mortgage payments once you have a reasonable deposit is quite the challenge for many.

by OldSkoolEconomics | 29th Apr 23, 5:37pm 1682746654

We are tracking houses with a view to moving sideways.

Of the 6 houses we are interested in.. in the last 2 months just one has sold.and for significantly under its market value.

We keep getting notifications of cancelled auctions, price drops, RE agents calling to say they have offers and would we like to make an offer to bid higher (but then the house is still for sale weeks later), told of bids subject to someones own sale (which is a nonsense bid).

Basically realoty is that there are very few sales and interest. So forgive me for being very sceptical of any stories of real 'green roots'.

People are still spending .. but saving too .. none i know are borrowing more money for any reason - and especially not to buy assets that are still falling in value with still increasing interest costs and potential for economic shocks.. buying houses now is really illogical.

by Shaft | 29th Apr 23, 9:23am 1682717022

One swallow does not make a summer !...

Get real!. .. the spin doctors are looking at many quarters of negative stats then see a couple of green shoots and bam,💥 we're all saved.

These guys are desperate for some good news and would sell their first born if it would make them and their industry/ cartels looks better

Next quarter will show the house of cards for what it is ... Built on slash, silt, debt, election promises, blips in stats, dreams, and guilt!

The next 3 months of winter will see tourism die except for Queenstown, energy price rises, retail die, exports slow, travel slow, and the spin winkers telling us it ok.

Orr needs a controlled recession.

Orr will get what the people decide!

Then post election the chickens will come home to roost...

Labour/ green - you're rooted

National - 1/2 rooted

Maori, you're rooted and divided and then bankrupt

ACT - can't be worse than the aforementioned!

NZD - don't even go there!

by Jamin | 29th Apr 23, 12:20pm 1682727658

Hi Shaft.

This is a creative articulate take on things.

If Cameron Bagrie was able to form his own financial advisory business, I’m sure you could do the same.

What would you call it?

by Zwifter | 29th Apr 23, 1:23pm 1682731404

Shafted

by Shaft | 29th Apr 23, 4:55pm 1682744157

BagCam!

by rastus1 | 29th Apr 23, 8:35pm 1682757347

Nice rant shaft. Have to agree with you.

by HW2 | 29th Apr 23, 9:01pm 1682758867

As I’ve said, many times, this strange period of history was never going to be forever – and the medium trajectory of the property market, as always, is up.

by al123 | 30th Apr 23, 7:14am 1682795650

Either you forgot quote marks or you've inadvertently confessed that you are Ashley Church (see last line of this): https://www.oneroof.co.nz/news/ashley-church-three-signs-the-housing-ma…

by HW2 | 30th Apr 23, 8:44am 1682801067

That is a joke?

Refering to Ashley or to One-roof brings out the werewolves, much as a full moon on a still night does. As imitation is the sincerest form of flattery, is there anything that says I must give credit for quoting.

Am I glad that you've been reading Ashley's oneroof articles and then calling me to account. YES

by al123 | 30th Apr 23, 8:36am 1682800567

Well it's an online comment forum and not a student essay, so you're not going to get marks off for plagiarism- but it is considered pretty bad form no matter what the context to directly copy someone else's published work and attempt to pass off their words as your own.

by HW2 | 29th Apr 23, 9:16am 1682716607

Notice how fhb have been saving and increasing the house deposit

Now 3/4ths have at least $132k but in 2019 only 2/3rds had more than 97k

by HouseMouse | 29th Apr 23, 9:27am 1682717250

If they have 132k it means they still have a mortgage upwards of 600-700k. Use a mortgage calculator to see how nasty those weekly payments are at 6.5%. Further, type in 8.5% for stress test and whether they can even get a mortgage. Report back.

97k in 2019 would have gone much further - much lower prices, and lower interest rates.

by HW2 | 29th Apr 23, 11:10am 1682723415

How fast is your oldest saving. Median lower quartile house price has risen strongly since 2019. Research and report back

Pretty soon mortgage rates and test rates will be lower. But then house prices for fhb house have already started rising. 3 percent since feb

by Treliving | 1st May 23, 9:58am 1682891921

My wife and I landed here in 2020, and we desperately want to buy, however, it makes no sense whatsoever with the current interest rates and house value. I'm a FHB with a combined salary of circa $280k and a deposit just shy of $200k. In Auckland on the North Shore, it currently makes no sense to buy a property over $1m with the current interest rates where they are, which is what you need to spend to get something half decent. I also have a trade background and have looked into renos.

As the land value is still too high even with material costs coming down, it makes no sense to put the effort into a property with no real reward. This is why the only open homes we go to with interest are immaculately presented with no legal issues and fully consented. So until property prices come down, the cheapest option is to rent by a long way and I'm saving the money that would have been going to banks if I was paying a mortgage.

If prices do stay where they are or go up, we will likely move to Aus once we have PR next year. We don't want to do this, but if we want a property and live in a city where we can earn a good wage this might be our only option. Median prices in Auckland would really need to reach pre-covid levels for it to make sense for us to buy.

However, I do wonder who FHBs are currently purchasing properties. Would be interesting if there was a FHB on this feed as I would love to know how they did it!

by printer8 | 29th Apr 23, 10:01am 1682719306

Yes, some increase in FHB compared to March 2022 but the 2,273 for March 2023 is still well down on the 3,347 for March 2021.

Number of investors is still very subdued; while 2,136 for March 2023 is the most in the past 12 months, it is down on March Mar 2022 (2,318) and down considerably - by a half - on March 21 (4,718).

Total new mortgages for March 2023 (16,655) is down slightly on March 2022 (18,467) and down considerably on March 2021 (31,282).

So overall the market is still very subdued with the number of new mortgages well down on March 2021 but not considerably compared to March 2022.

Of note, prior to the peak in November 2021 since the start of data in August 2014 there were more investors each month compared to FHB, but in the past year there has been consistently more FHB than investors each month.

by Miguel | 29th Apr 23, 12:51pm 1682729512

This is even more relevant when you compare total sales volumes with consents from 12-24 months ago.

Since early 2021 consents have been sitting between 4k and 5k per month. Since mid-2022 total sales in NZ have been sitting 4.5k - 5.5k per month. The majority of sales will be existing properties. So unless sales volumes pick up significantly, there will be a large number of newly built properties going unsold (I suspect primarily in Auckland).

by DTRH | 29th Apr 23, 10:08am 1682719686

What about the FHB who purchased after 2020 they paid huge amounts over 2019 price’s and are now sitting with 20% reduced value in the price of house. Strange article why did they not go back to 1990 I know FHB are paying a lot more now than then

by IT GUY | 29th Apr 23, 10:34am 1682721281

Bank mortgage lending has fallen off a cliff year to year March figures

by Shaft | 30th Apr 23, 3:31pm 1682825487

Bye🖕

by Market Interest | 29th Apr 23, 1:46pm 1682732796

Rule #1 of auctions - never bid against yourself.

Unbelievable how some people allow themselves to be manipulated.

by HW2 | 29th Apr 23, 2:55pm 1682736934

Do you know who wins the negotiations, the one who wants it the least and is willing to walk

by Shaft | 30th Apr 23, 3:33pm 1682825590

Bye🖕

by HW2 | 29th Apr 23, 5:02pm 1682744569

That Stupid Boy!

Since he was the only bidder, he is the market.

by Hahashishi | 29th Apr 23, 4:47pm 1682743674

Indeed. Look at how many people got vaccinated. What a wild social experiment that was.

by Shaft | 30th Apr 23, 3:35pm 1682825705

Please remove my account!

To much left bias vetting Here!

by Shaft | 30th Apr 23, 3:36pm 1682825777

Go woke go broke

by JBA | 30th Apr 23, 5:05am 1682787942

When they ask you to come out back in step 3 what is their play?

by Shaft | 30th Apr 23, 3:38pm 1682825936

Comments here are lost in all the noise!... The they are vetted by trendy lefties

by Pa1nter | 30th Apr 23, 7:56am 1682798168

Should one wear a Top Hat, or a Monocle to the affair?

Teach us how to be a baller

by HW2 | 30th Apr 23, 9:50am 1682805032

🧐

🥸

🤣

Sorry guys, I have to go do some work and stop wasting time

by Pa1nter | 30th Apr 23, 10:13am 1682806387

There's a work around for that also. During the auction, just start pretending to talk business stuff into your cellphone, it'll put everyone off.

Wire me 10,000 Kuregrands to my Swiss account, stat!

And

Buy high, sell low!

by ex agent | 30th Apr 23, 10:29am 1682807351

Why would anyone be buying now especially when they are borrowing expensive money from a bank unless of course they are selling and buying in the same market conditions. Winter is upon us. Sales slow down. Then we will go into spring and a lot of houses are going to hit the market and many of them will be hoping to be offered more than they were offered earlier this year. Or they will be hoping to get an offer as many didn’t hence they were taken off the market. Interest rates will still be high in spring. First home buyers should hold off until interest rates start to drop, sales numbers increase and prices start to turn upwards. The election will keep the housing market in a holding pattern as the outcome will affect it in different ways. Buying now is expensive and there are risks. Especially in Auckland as it costs too much to buy a cold unmaintained heap in a very average location at best.

by Pa1nter | 30th Apr 23, 11:08am 1682809688

Why would anyone be buying now especially when they are borrowing expensive money from a bank unless of course they are selling and buying in the same market conditions.

I guess some people have desires to acquire property that don't factor in quite so much terror and doom as some of the fine minds here.

by ex agent | 30th Apr 23, 11:49am 1682812195

Tell that to the FHBers currently in negative equity and struggling with all the increased costs of living including their bank repayments. That is the reality out there and not only in New Zealand. I can only presume you are currently coping with your daily costs. Sometimes it is better to rent and now is one of those times. You will pick up a cheaper and better home if you are patient.

by Pa1nter | 30th Apr 23, 11:45am 1682811910

Sometimes some people win and sometimes people lose.

They always said the post covid economy would be one of Y shaped fortunes.

by ex agent | 30th Apr 23, 11:54am 1682812484

Why should some people lose by accident of their date of birth. Unfortunately they listened to spruikers, parents, friends , agents and work mates in 2020/2021 and bought at silly prices. Now they are up the creek without a paddle or other words to that effect. As a country we have a lot to sort out and pay back fiscally wise.

by Pa1nter | 30th Apr 23, 1:24pm 1682817846

Why should some people lose by accident of their date of birth.

Someone is always getting more than you. Most others are getting less.

Morality is a human creation and the universe doesn't have any.

by Zwifter | 30th Apr 23, 7:18pm 1682839119

Nothing wrong with bidding against the auctioneer. Basically you always go into the auction with a hard and fast value which is what you put on the property and nobody else. You simply don't care who is bidding and the aim is always to be the top bid even if it not up to the reserve and that gets you in the door out the back to negotiate. Even when you both agree on a sale price it still returns to the floor for anyone else to go higher. Its simply the auction process and it really cuts out all the rubbish if you have the cash.

by Rob Reid | 29th Apr 23, 10:45pm 1682765141

Interesting story (from an academic point of view - I am permanently out of residential property).

Could take a generation to dry up the stagnant ponds of FOMO still out there.

by macca | 1st May 23, 1:00pm 1682902800

The Labour govt's attack on rental owners has artificially aided 1st home buyers (great, my daughter is a FHB who recently purchased at a discount from what the seller paid just 12 mths before), but at the expense of renters who are getting evicted at an increasing rate as investors bail out due to loss of interest deductibility. The govt cant have it both ways when it distorts/fiddles with the market.