First home buyers' share of the housing market slipped in February

Property / analysis

First home buyers' average estimated purchase price down about $10,000 to $20,000 year-on-year

30th Mar 24, 6:01am by Greg Ninness

The latest figures from the Reserve Bank and the Real Estate Institute of New Zealand show a surprising decline in first home buyers’ share of the housing market in February.

The Reserve Bank reported 2019 new mortgages being approved for first home buyers in February, equivalent to 35.5% of the sales reported by the REINZ in the same month.

It must be said that simply comparing first home buyers’ loans with REINZ’s sales each month does not give an accurate indication of first home buyers’ likely share of the housing market and almost certainly overstates it. But what it does do is give a reasonable indication of the trend in their market share, and just lately that trend has been down.

The 35.5% share used in the rough calculation above was the lowest it has been in any month of the year since April 2022. For most of last year it was well above 40%.

First home buyers also appear to be a bit more price constrained than the rest of the market so far this year.

Interest.co.nz estimates the average price paid for a home by first home buyers was $661,000 in February, down slightly from $670,000 to $680,000 in the second half of last year.

However that may be nothing more than a seasonal blip and their average price could rise back up once this month’s (March) figures are in.

The significant movement comes when comparing the movements in the average price first home buyers are paying against the REINZ’s lower quartile selling price.

In February the estimated average price paid by first home buyers was 111% of the REINZ’s lower quartile price, which was the lowest it has been since July 2022 and a reasonable decline from last year when it was hovering around 115%.

However none of this suggests the first home buyers’ market is about to collapse. In fact it remains probably the least volatile of all housing market segments.

But what the preliminary data and the anecdotal evidence interest.co.nz is hearing both suggest, is most of the uplift in sales that’s occurred so far this year has come mainly from existing home owners trading up or down and to a lesser degree from investors starting to stir again.

However we are at the tail end of what is usually the busiest time of the year, so we’ll get a much better idea of where things are headed as the March figures start rolling out over the next couple of weeks.

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59 Comments

by 1689 Baptist | 30th Mar 24, 7:15am 1711736113

FHBs taking Retired Poppy's advice?

by tothepoint | 30th Mar 24, 9:21am 1711743671

As mortgage interest rates start to fall (which may already be happening) all categories of buyer will become more active - at least until house prices catch up again.......

TTP

by IT GUY | 30th Mar 24, 4:48pm 1711770529

You are stating your opinion as fact, please provide monthly examples of house price vs interest rates during the last period of easing ie GFC or 1989? You know that once rates start coming down the country is in such a mess that house prices keep falling for a number of quarters.....

by tothepoint | 30th Mar 24, 5:42pm 1711773771

Hi IT GUY,

Interest rate falls are recent phenomena. And guess what, my friend....... The HPI is already showing an increase in house prices. 😲

For sure, lags of varying lengths occur across different cycles but, ceteris paribus, a rise in house prices is almost inevitable. 🥵

TTP

by Retired-Poppy | 30th Mar 24, 9:20pm 1711786802

tothepoint, you crack me up! Try spruiking this stuff to the que of frustrated venders who own the growing pile of unsold inventory as we head into winter and continued recession.

Your mentor TA even reported this "Investors have decreasing interest in either purchasing a new dwelling or building one in their own development" This can only mean the Flippers of yesteryear (now bag holders) have once again cast their votes and it would appear those who once echoed the words "rental income is a key driver of capital appreciation over time" are now predictably losing the faith!

Sure over time there are upswings and downs. But here's the best part, you refuse to acknowledge use of "adjustment for inflation" as a measure of performance until house price appreciation actually exceeds it. Investors are baulking at the cost of debt, insurance, rates and maintenance and aren't receiving (and don't foresee) the historic levels of capital appreciation as compensation. They're unable to shift these costs to tenants. This is why under the growing weight of inventory, I believe their is still further downside to be had before any sustainable upswing.

Do you seriously believe the stuff you post or is it just a deliberate wind up? Just wondering....

by tothepoint | 30th Mar 24, 9:01pm 1711785666

Sadly, someone has lost their rag over the recent HPI increases……. 😤

TTP

by Retired-Poppy | 30th Mar 24, 9:21pm 1711786879

If it helps, you keep telling yourself that :)

by CN - new | 31st Mar 24, 2:00pm 1711846850

House price trend extrapolators continue to extrapolate.

by Flying high | 30th Mar 24, 7:23am 1711736607

https://www.nzherald.co.nz/nz/home-truths-first-home-buyers-feel-intere…

"Mum's rented her whole life and all us kids grew up in rentals and moving all the time"

Sadness in that statement, despite spending hundreds of thousands on rent

by IT GUY | 30th Mar 24, 7:59am 1711738751

Yes imagine if houses had stayed at the same % of their income the entire time... of course thus can continue though around 80% of income they wont need those expensive new diet pills /sarc

However none of this suggests the first home buyers’ market is about to collapse.

In fact it remains probably the least volatile of all housing market segments.

Many fear for the 1.5mil + market

by Yvil | 30th Mar 24, 2:06pm 1711760776

"Yes imagine if…"

IT, in order to make good decisions, we have to be able to see and accept the way things are. It might be tough, but it's better than wondering what if.

by phalanax | 30th Mar 24, 8:14am 1711739658

Even sadder if you pay hundreds of thousands too much or lose hundreds of thousands because you bought at the wrong time or end up paying hundreds of thousands more because interest rates jump on you... Where is this much touted affordability? .... Is it in the council rate increases...The insurance increases....Maintenance cost increases... Market needs a significant shift and likely thats some way off... lets face it ...its looking pretty darned 'ugly' out there at the moment for FHB's plenty of additionals have crept into the equations.... Would be a brave man that throws all there built up savings into making a first time purchase presently.... 'unstable' , I think would be a fair comment to make of the housing market today. Until something major changes that capital is better off sitting in a TD .... Throwing caution to the wind and jumping in boots and all might sound inviting and will be what the agencies want...but they wont be taking the hit if the proverbial hits the fan....I see no recent return of affordability in fact I see markedly higher outgoings flooding the market... lol

by Flying high | 30th Mar 24, 8:15am 1711739745

I'll take your sadness buying at the wrong time and raise you sadness at growing up unsettled

by phalanax | 30th Mar 24, 8:30am 1711740615

Lets accept the economy presently is SAD....lol :) Likely RE agents are SAD also because they are forced to work harder for a sale.... flogging off over valued RE to newbies so present owner/ occupiers can escape the recent flood of outgoing rises... lol . It is indeed a SAD state of affairs... Once again I will say, Where is this much touted AFFORDABILITY everyone keeps spouting off about?

by Flying high | 30th Mar 24, 9:23am 1711743817

Affordability is like Beauty... as its in the eye of the beholder............. For the many buying, its a stretch but not unaffordable. While for yourself its UNaffordable

by TronMVP | 30th Mar 24, 11:01am 1711749709

Despite the narrative of many, FHBs are still busy in the market, with 1.1 billion dollars of lending to FHBs in February 2024.

by phalanax | 30th Mar 24, 7:04pm 1711778642

Assumptions....lol

by Nzdan | 30th Mar 24, 8:15am 1711739718

True, but what does that look like over 30 - 40 years?

In the 1970's the average house price was around $20k, average wage $6k. Using today's "paying hundreds of thousands too much" would be like paying $80k for a house worth $20k and seeing its value fall to $60k.

by IT GUY | 30th Mar 24, 8:18am 1711739913

You are staring at a way lower NZD here

“The fact that the US economy is growing at such a solid pace, the fact that the labour market is still very, very strong, gives us the chance to just be a little more confident about inflation coming down before we take the important step of cutting rates,”

Sure this will help our exporters as long as demand stays strong but imports will have 10%+ inflation over the next 12-24 months here. Meanwhile thousands of people are being made redundant across NZ. There is no way RBNZ is going to be able to stop imported inflation over the next few years. Stagflation is here. PDK it looks like we are near the limits.....

by Sam Bridgman-Smith | 30th Mar 24, 8:02am 1711738959

There was a recent article in one of the mainstream media outlets about house sitting to avoid paying rent and to save a few bob.

My wife and I were full-time house sitters for two years, a few years prior to the housing market going truely bonkers around 2020. It is a good strategy to get ahead, but wanted a family before time ran out and house sitting is impractical with an infant.

I won’t discuss my personal situation in too much detail, I’ll just say we got lucky.

But I utterly despise this property bubble we’re living through due to the societal harms it is doing.

Think of all those young families who hustled the best they could to save for a home, only to see prices nearly double in 2020. How bitter it must make them feel as a result? No wonder people are losing faith in the social contract.

Past bubbles include such things as South Sea shares and tulips. Anyone with a good measure of critical faculties could opt out of these, but it’s a lot tougher to opt out of the basic human need of shelter.

The hole that we’ve collectively dug for ourselves - especially young people and first home buyers - is colossal. House prices are still a very long way from being affordable and so it’s preventing many people from reaching their full potential. (They instead devote more resources to the cost of living.)

Personally, I think NZ is in bigger trouble than many imagine.

by IT GUY | 30th Mar 24, 8:10am 1711739412

At 70% of total bank lending it may represent some concentration risk to the banking sector... Of the remaining 30% that covers agri, dairy and horticulture and... ... wait a minute!

and

No need for Fed to rush rate cuts: Powell

NZD going to fall hard if we cut first and looks like we will need to later in the year ... FED may even need to hike again....

by Sam Bridgman-Smith | 30th Mar 24, 9:17am 1711743450

Indeed, I get the impression that much of the talk of rate cuts at this stage may well be just wishful thinking.

by ChrisOfNoFame | 30th Mar 24, 10:10am 1711746623

We're in what will probably be a deepening recession. Wishful thinking it is not.

by Nzdan | 30th Mar 24, 8:21am 1711740107

What gets me is the whole victim blaming directed at young people which shifts depending on the circumstance.

"The reason you can't buy is because you're frivolous, cut out the avocado on toast and take out coffees. Just work hard, save and you'll buy"
*young person works hard, saves, buys*
"You moron, why did you buy? It should have been patently obvious interest rates couldn't stay low forever, you only have yourself to blame"

by Pa1nter | 30th Mar 24, 8:50am 1711741809

That's the great thing about the internet. Pick a scenario, you'll find someone to knock it.

by Sam Bridgman-Smith | 30th Mar 24, 9:25am 1711743944

I enjoy your contrarian and challenging way of thinking Pa1nter and would be curious to know your views on the following;

What are you views on housing affordability in NZ and where do you think they’ll head towards in future?

Despite many insights, many points of views on this forum tend to reinforce each other. I’m after more objective reasoning and insights, even if it goes against my personal views.

by Yvil | 30th Mar 24, 1:48pm 1711759726

Well said and good on you. Just reinforcing one's opinion with like minded people is very dangerous, and mostly what is happening on this site.

by K.W. | 30th Mar 24, 12:28pm 1711754883

Come on, of course its their fault. All they need to do is give up the avocado and eat rice for a year.

https://www.realestate.com.au/news/young-property-investor-that-ate-ric…

by cromp | 30th Mar 24, 8:24am 1711740279

Spot on comment. You can have all the Goverment social programs but they won't be as effective as affordable housing.

by IT GUY | 30th Mar 24, 8:52am 1711741964

This may be the best comment of the year so far.......

by Pa1nter | 30th Mar 24, 8:54am 1711742099

But if you had a deregulated house market and no social programs, what would government do?

by makechange | 30th Mar 24, 10:04pm 1711789497

Bring back the Smokefree law now that landlords don't need their social tax cut programme? 😅

by redcows1 | 31st Mar 24, 9:33am 1711830800

Worth reading a lot of dross to get to that comment.

That needs to be writ large and bright on the front lawn of parliament.

by phalanax | 30th Mar 24, 8:52am 1711741927

Bring in 5% Stamp duty on all transactions .... use the proceeds to build 1 house in 25.... Waits for the industry to sling mud my way...lol , Those commissions are shrinking....Coffee and Avocado on toast for everyone ! ....lol

by Flying high | 30th Mar 24, 10:41am 1711748516

1 in 25 would be 4 percent not 5 percent. Unless you mean the rest of the money gets consolidated to govt accounts

by phalanax | 30th Mar 24, 7:51pm 1711781506

Bingo.... you figured it out... Govt wins .... and its a rock solid dead cert win . 'The Accumulator'.... Market can do whatever it wants but the govt gets its slice of the action and is able to start supplying more housing courtesy of the market . Im thinking it would add 2000-2500 houses a year care of sales activity. Zero Liability Assets... be glad im not the housing minister....lol

by Flying high | 31st Mar 24, 8:21am 1711826472

It could be a good thing to pull in more revenue as the govt HAS TO balance its books. I would vote for you if you wanted to fix the broken housing market but I think your agenda could be far wider to the left

Good luck to the PM if he goes back on election promises as the electorate driven by leftists and disruptors, become irate about broken promises and backdowns, while the media have a field day playing "topple an MP/PM"

The govt has a big job to do which will take more than 3 years to see results, so the longer the coalition is in power the better.

by ChrisOfNoFame | 30th Mar 24, 10:07am 1711746441

Bank's becoming stricter with lending in case the borrowers lose their jobs?

This would affect the younger cohort more than the mature cohort with their longer career histories, higher wages/salaries, and with greater existing equity.

by ex agent | 30th Mar 24, 10:43am 1711748631

I regularly hear that a child of someone I know is off to Australia or off to London. Who can blame them. We are a nation of high house prices, high interest rates and low wages. And high living costs. I know two young cops who are paid around $75k. Who would risk their lives for that kind of dough? No wonder they are off to Australia.

by Nzdan | 30th Mar 24, 11:12am 1711750362

$20k relocation bonus too. And their cops don't mess around over there, so not under as much scrutiny for being heavy handed.

The cop I know is tired of having to tip toe around cultural issues and endless paperwork to satisfy those in offices. Being accused of racial profiling despite being Maori himself. Dealing with untouchable 15 y/o's built like 25 y/o's out stealing cars who won't take instructions and heaven forbid he tries to restrain the precious little angel. "He dinn du nuffin ow, you racist pigs".

by TronMVP | 30th Mar 24, 11:16am 1711750601

@ ex agent though there is some truth in that, often young people go to London or Australia simply because they are more exciting places to live. Young Kiwis in London are living in small houses, often sharing with many others, but are having a great time cos they work hard and play hard, and the house is there to sleep in when you get home at midnight.

by Jesse1 | 30th Mar 24, 1:43pm 1711759424

I know a lot that left London and moved to Sydney which for them is close enough to visit family. They are doing a lot better than if they came back to NZ. A lot of our best don't ever come back.

by 1689 Baptist | 30th Mar 24, 3:01pm 1711764083

I am not sure what motivates someone to move to London or Sydney, but I can assure you it is not house prices.

by TronMVP | 30th Mar 24, 3:18pm 1711765127

It's the exciting lifestyle, many things to do, young people going out trying out new bars, restaurants, cafes, nightclubs, music scenes. Plus the income to pay for all of that.

by Flying high | 31st Mar 24, 8:36am 1711827375

Exciting until one day when the dream is over and they wake up. The years from 35 to 75/80 are painful if provisions not made

by Baywatch | 31st Mar 24, 8:01am 1711825298

Agree you are not sure...

by K.W. | 30th Mar 24, 12:25pm 1711754715

The FHB market was juiced by the sudden addition of 210,000 newly minted Permanent Residents courtesy of Jacinda Ardern's "Be Kind" covid policy. These people promptly hit up the taxpayer funded home loan scheme and other benefits, and aided by cashed up overseas relatives, hit the NZ property market. Now its likely that cohort is finally exhausted. Now maybe actual New Zealanders can have a crack at buying a house.

https://www.oneroof.co.nz/news/first-home-loan-scheme-is-open-to-abuse-…

The majority of home buyers accessing the government’s First Home Loan scheme are new arrivals to New Zealand, mortgage brokers have told OneRoof.

Kiwi Mortgages mortgage adviser Jatinder Singh has also seen an uptick in new residents accessing the First Home Loan. “Most of the new residents who recently got their residency are actually buying a lot of houses,” he said.

“I don’t say that no one [citizens] is buying, yes there are a few, but if you are talking about the ratio then yes the ratio for resident visas are buying more first homes than the citizens.”

Harcourts Mount Roskill business owner Nick Kochhar says that of the first-home buyers active in his area, more than 60% would be new residents with First Home Loan approvals.

by Baywatch | 31st Mar 24, 8:03am 1711825387

Thank goodness the new Government is cracking down then, sorting this out, on the right track as promised.

by ChrisOfNoFame | 31st Mar 24, 1:25pm 1711844757

The sarcasm is strong in this one.

by wingman | 31st Mar 24, 11:43am 1711838600

Can anyone tell me how house prices can possibly fall with...

Massive immigration

Falling NZD

More expensive building materials

Shortage of available land for subdivision

Extortionate building consent expenses

Endless surveyors, engineering and report expenses

Escalating legal costs (in my case the conveyancing fee for purchase of bare land was $3,171)

Red Sea attacks, Suez Canal and global trade disruption.

by NZGecko | 31st Mar 24, 10:33am 1711834405

Do we really need to show you the thousands of examples, where a market distortion/disconnect/lack of backed earnings or lack of DDDebt funds - has had thousands of various products fall well below the cost of production??? in some cases for YEARS!

You seem to live in a land of blindspots.......

-Best you remove the blinkers?.......

Or perhaps its just the recency bias, that still has many captured within, that we all have lived through the 40 golden years of "forever cheaper DDDebt" that ended, cold dead, then reversed in 2021?

Free money days is finished!

by Flying high | 31st Mar 24, 10:58am 1711835914

Easter Sunday, its the day of resurrection of Jesus! Maybe or possibly also the NZ housing market, time will tell

by wingman | 31st Mar 24, 11:04am 1711836269

I've been hearing about the impending property crash here for ages, but it appears to be on hold...indefinitely. My neighbour just sold for $300k over CV.

Less houses under construction and loads of immigrants...what's that mean to the trained mind?

by NZGecko | 31st Mar 24, 11:24am 1711837458

The poor new immigrant "living the good life" in NZ at 20x to a 3 beddy in Auckland......well, that will really boost the falling Property Peakers Ponzi!

The biggest NZ property crash ever witnessed, is well into it now, with many places down 20 to 48% in Real terms in just 3 years!

Ludacris how some are now so blinkered, they are not seeing this as a crash.....

by wingman | 31st Mar 24, 4:41pm 1711856501

There's no crash where I live...maybe where you live.

Land is selling like hot cakes where I'm building, one subdivision sold out in 2 weeks.

The time to buy was about a year ago as Comrade Arden and the incompetent Labour Govt. wreaked havoc on the NZ economy, and sent interest rates through the roof.

by NZGecko | 31st Mar 24, 1:09pm 1711843744

Sorry, interest rates are still very much through the roof, as for any many people who paid way too much for property at 6x to 12x DTIs.

These poor sops need the 3 to 4% rates - to live freely again.

So rates past 5% have many, many, in a very precarious place and the need to deleverage is increasing by the week.

Soon to be reported here, is more than 22,000 behind on mortgage payments......

....It seems some here are not reading the room, "Prisoners to the Ponzi" or not assessing the Real market conditions very well......

Importing the third world here as Uber drivers and FushnChup cooks, 20x to a house, won't be the savior some here, that are on their knees praying, palms clutching, for!

by wingman | 31st Mar 24, 2:19pm 1711847999

Auckland property prices rose 3.72% in the year to Feb 2024.

So much for the great property implosion, predicted endlessly here.

https://www.opespartners.co.nz/property-markets/auckland

by ChrisOfNoFame | 31st Mar 24, 1:24pm 1711844694

Normally loath to publish anything related to OneRoof but this article - from spruikers, no less - admits that LLs (landlords) have advantages over OOs (owner occupiers) and FHBs ...

https://www.oneroof.co.nz/news/warning-to-first-home-buyers-as-anz-give…

And yes ... interest deductibility does get a mention or two ...

by CN - new | 31st Mar 24, 2:20pm 1711848009

"LLs (landlords) have advantages over OOs (owner occupiers) and FHBs ..."

Recent conditions have been favourable for non owner occupier buyers. Some of the reasons that non owner occupier buyers can outbid owner occupier buyers (such as upgraders, first home buyers)

1) interest deductibility

2) interest only financing

3) in an upward house price market - equity recycling resulting in zero savings required as the deposit is borrowed (in effect 100% of the purchase price is borrowed)

4) investor / non owner occupier buying syndicates - combined borrowing power results in higher purchasing power, higher than for a owner occupier buyer on 2 incomes for most owner occupier buyers.