Just under a third of mortgages issued to first home buyers in March were low equity loans

Property / analysis

First home buyers are paying $659,481 on average to get into a home of their own

27th Apr 24, 6:43am by Greg Ninness

The number of first home buyers getting into a home of their own is steadily increasing while the average price they are paying is slowly declining.

According to the Reserve Bank, new mortgages were approved for 2447 first home buyers in March, up 7.7% compared to March last year. However, that's down 26.7% compared to the peak of 3338 mortgages approved to first home buyers in December 2020.

Of the mortgages approved to first home buyers in March, 750 (30.6%) were low equity loans where the buyers had less than a 20% deposit.

The percentage of low equity loans to first home buyers has been relatively stable at around 30% since May last year, but is well down from the peak of 40.3% achieved in May 2020.

However, while first home buyers remain very active in the market, the numbers suggest they are being cautious about the prices they are paying.

Interest.co.nz estimates the average price paid by first home buyers was $659,481 in March.

Although there are monthly fluctuations both up and down in the average purchase price, as the graph below shows, the long term trend has been a gradual decline since it peaked at $717,681 in December 2021.

Although first home buyer activity tends to be less volatile than other segments of the housing market, it still follows seasonal trends.

So it's likely that the number of homes being purchased by first home buyers will start to wane as we head towards winter.

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37 Comments

by tothepoint | 27th Apr 24, 6:56am 1714157813

First home buyers remain keen to own the roof over their head - despite relatively high mortgage interest rates……

Most will argue that the non-financial and financial benefits across the longer term make it a wise move.

TTP

by Toye | 27th Apr 24, 9:00am 1714165205

Lambs to slaughter

by NZGecko | 27th Apr 24, 12:47pm 1714178822

Low equity, all risky USA ARM-style mortgages, what could go wrong??

The NZ housing market is propped on the bad loans, made in 2020 to 2023. The unravel has begun......perhaps just an itsy bitsy gully.

https://www.youtube.com/watch?v=iDcbUAh731s

Govt Bonds tell us, NZ mortgage rates are again, set to rise.

FHBs are the cannon fodder that the REA filth require, in vain, yet failing attempts, to refire the ponzi.

The underhand swindling of many REAs is well known, just look up the ttp record.

Now job losses are mounting as prices crash further.

Housing market confidence has plummeted and the resulting capital losses, already eye watering, mount higher.

by TronMVP | 27th Apr 24, 8:40am 1714164000

"FHBs are the cannon fodder that the REA filth require, in vain, yet failing attempts , to retire the ponzi" - nice bit of poetry there, reminds me of the stuff of Wilfred Owen.

by agnostium | 27th Apr 24, 11:54am 1714175644

Dulce et decorum est pro Ponzi mori

by TronMVP | 27th Apr 24, 1:18pm 1714180714

The General, 2020

"Good morning, good morning " General Orr said

As we met him last week on our way to the banking mortgage application line

Now the punters he smiled at are now heavy in debt

And we're cursing his staff for incompetent swine

"He's a cheery old card" said Harry to Jack, as they walked to the bank with 10% deposit in a pack

But he did for them both by his plan of attack.

(Apologies to Siegfried Sassoon)

by phalanax | 27th Apr 24, 8:09am 1714162165

Roughly 9% drop in the average (2021-24) My interest would be whether they are getting weather tight and structurally sound also reasonable locales in which to raise children. I think when many think of affordable housing they ignore the fact that much of the affordability lays in socially dysfunctional locales . Are these the houses speculators and investors dont want ? If they are then I have no problem with a lower deposit threshold for these particular first home buyers... they are the pioneers venturing into the wastelands paying more than just money to have a roof over their heads... risk is higher but for those determined enough it lays a foundation from which they can grow . Is the risk substantial? Likely not due to the fact that there will always be someone waiting in the background to take their chances.

I see some scope for the aspiring in the sections market (landbank) and watch with anticipation whether this market has some declining value to be found. If HFL holds I expect there will be more value to be extracted from those wanting a quick out from general RE. I think its its wrong to blame the RE agents they might very well be your friend when it comes to hunting down some value in this slowly declining market.

by Eschaton | 27th Apr 24, 8:38am 1714163937

Better for people to own in undesirable areas, an insentive to improve the area.

by HouseMouse | 27th Apr 24, 8:24am 1714163053

Are FHBs really ‘very active’ in the market? It’s way down from peak.

by TronMVP | 27th Apr 24, 8:48am 1714164527

Around $1.1 billion dollars in new loans for FHBs each month, and more than 20% of the of sales (36% in Wellington, 28% in Auckland)

by Rhumline | 27th Apr 24, 6:33pm 1714199622

Wow! 36% in Wellington?

by FOTC | 27th Apr 24, 9:37am 1714167442

Perfect way for young couples to get ahead in life, saddle themselves with $659,481 worth of debt.

by phalanax | 27th Apr 24, 10:03am 1714169012

What would you suggest is an ideal 'affordable' for 2024 ...keep in mind that if you make prices too cheap...then less folk will be inclined to go to work....the bar in colonial society used to be 20 years of toil.... lol

by Kate | 27th Apr 24, 3:18pm 1714187909

In my opinion it would be:

((Gross minimum wage x 2) + 10%)) x 5 = affordable 3 bed home

= $529, 520

And many would argue that using a factor of 5 times household income (at min wage), assuming a two-person household, and a government transfer rate of 10% of household income pa is pushing it.

But, it would most certainly give more hope/opportunity to FHBs/young families than where we are at now.

by HouseMouse | 27th Apr 24, 4:51pm 1714193471

And how can that price point (or close to it) be delivered?

The answer is pretty easy, but no party wants to take it up.

by Flying high | 28th Apr 24, 8:57am 1714251459

Make all residential land the same cost as farmland? Introduce CGT? HouseMouse you're always making crytic comments pretending to be the smartest person here. The truth is you have no clue or you would be out there doing it and making money.

Have you seen cash-strapped councils' latest moves of upping development charges? Do you realise that wont reduce the cost of new homes.

Whats your easy answer, we are waiting

by HouseMouse | 28th Apr 24, 9:16am 1714252577

Do what our governments did in the distant past. Mass house building programs, supported by low interest loans.

Take out the profit margins and GST, and get economies of scale and voila - 3 bedroom townhouses circa 500k.

unlike state house development, the government recovers its spend, or at least a big chunk of it.

Of course it won’t happen because no party believes in big government programs anymore.

by Flying high | 28th Apr 24, 2:53pm 1714272831

Now you're talking, however the red party that promised that solution 8 years ago were pulling your leg in order to get your vote. Surprise surprise, there was no serious planning behind it

You should stand for govt.... "the answer is pretty easy"

by HouseMouse | 28th Apr 24, 2:57pm 1714273026

As I have said before - David Shearer’s original plan for Kiwibuild was quite similar to what I outlined. It then got taken over by that fool Twyford, who thought he knew better. But he most certainly didn’t.

by Time Lord | 27th Apr 24, 10:23am 1714170183

and $850,000 interest on top of that debt

by malamah | 27th Apr 24, 10:53am 1714171985

And 1 or 2 children on top of that? Nah.

Actually beginning to think that having children may be a better long term investment for younger generations than buying a home.

by 1689 Baptist | 28th Apr 24, 5:42am 1714239745

The alternative would be for this young couple to rent. Assuming 35k a year with 4% rent inflation they will pay 3.35 million over the next 40 years.

by Nzdan | 28th Apr 24, 9:22am 1714252925

Over that same course of time, assuming a $750k property (approx 10% deposit) and also 4% inflation over 40 years, their home will be worth $3.6m

by phalanax | 27th Apr 24, 11:21am 1714173677

1966-2008 no variable mortgage rates under 5% ..1980-1990 rates make todays rates seem extremely low...

https://teara.govt.nz/en/graph/23100/interest-rates-1966-2008

by HouseMouse | 27th Apr 24, 11:21am 1714173719

So what? House prices relative to income were much lower

by kwbrn | 27th Apr 24, 4:02pm 1714190565

Because house prices are too high you think that savers should subsidise borrowers so that they can pay even more. Low interest rates and a plentiful supply of money got us to where we are.

by phalanax | 27th Apr 24, 5:57pm 1714197452

If a global crisis shows itself and net migration goes negative things could trend markedly down. Looser planning and more Flats /Units could help however banks wont be keen on doing much that loosens their hold on the market though. The crowd keen on making the values stick unfortunately have the banks backing....keep in mind that even when values do decline they usually bounce back within a decade. Will be interesting to see what the next 12 months bring.

by RickStrauss | 28th Apr 24, 11:57am 1714262245

And we only need to look at how many houses too many of our MPs (and the PM) are holding. Stands in the way of affordability for following generations.

by Palmtree08 | 27th Apr 24, 8:21pm 1714206063

What jobs? You obviously weren't around '80/'90?

by phalanax | 28th Apr 24, 8:17am 1714249050

You assume because the historical data has Unemployment high that jobs in the 80's /90's were hard too find...I had no difficulty ... Stood on the deck of a US nuclear powered ship when it arrived in 76 and enjoyed a free 7up courtesy of the US govt....lol..Fake Muldoon money ....Queen st protests...I was there alright....Unions had teeth not like today... items that are dirt cheap today cost more...credit was not so available... tradesmen were time served and real.... Lines outside the TAB's on Saturdays...Auckland had likely just finished with electric trolley buses by the 80's but I remember riding them in the 70's ... Mayor Robbie...shoe shines on Q st ...Wanna buy a flower?... Dawn raids ... Circus at Western springs... the big smoke was an eye opener for this Mainlander.... remember standing at a bus stop on Dominion rd and tagged in spraypaint on the wall was 'Welcome to Auckland *ss*ole of the world".... but it was far from that, Auckland was the cutting edge of NZ ...now its drowning in itself...a mere shadow of its former self....lol

by John Mendel | 27th Apr 24, 7:30pm 1714203018

FHBs don't have better options, rent 3/4 beds in North Shore is almost similar to my mortgage, 800-1K per week and this can be increased even further, depends on immigration

by IT GUY | 28th Apr 24, 4:59pm 1714280355

https://www.stuff.co.nz/nz-news/350248915/tiny-home-doesnt-fit-rules-an…

This is an example of BS stepping on small people, make it hard to home her and we will all pay the price...., vs her getting ahead...... 40K to say ok.... that's nuts.

Tiny homes will not end the Ponzi, it may well allow some older people to retire in a minimum level of comfort. Perhaps we need legal sites that offer long term tiny homes, trailer parks basically.

by phalanax | 28th Apr 24, 5:49pm 1714283350

Yes id agree that having legal sites would help...what I would not like to see is leasehold sites...What I would not want to see is 'all and sundry' sites . I think age restrictions could create safer environments. Freehold tiny sections for those aged 50 or 60 plus . Same for other age groups. I know there are a few older folk currently living the motorhome life that likely would settle for a small freehold tiny home in a safe locale over the Hundred thousand plus motorhome they currently have . Can it be done, freehold compliant tiny house connected to services with residential type village layout for under 300k? I guess that depends on which part of the country you build .

by IT GUY | 28th Apr 24, 5:50pm 1714283406

Its the freehold bit that's going to make it expensive, land is still $2,000 a sq m in much of AKL, older people want to live within reach of public transport. there will always be a body corp if not on services... Wow its nuts how expenses land is in NZ. I sold land at $4,000 a sq m in Glendowie and purchased at $20 a sq m in Wainui, just outside Silverdale.

But what cost to allow others to have some of my land.... and therein lies the problem, not lack of land.

Cheaper to just park the motorhome somewhere I suspect

by phalanax | 28th Apr 24, 6:19pm 1714285182

Yes...Aucklands too expensive...would it fly if you established a 'tiny house nation' somewhere in NZ ? This person seems to be having problems doing so and appears to know whats causing problems... he cant even get a street named without problems...lol Not sure Featherston's the ideal local some harsh weather ...need a location thats high and dry with friendly weather patterns.

https://www.nzherald.co.nz/nz/featherston-tiny-homes-developer-wants-re…

by IT GUY | 28th Apr 24, 6:26pm 1714285587

Agree you need an end of rural dead end road valley that's still close to hospitals etc... In behind me there are some good candidates.... between kaukapakap/pohoi area... These are decent people who just need a break, where they can establish a tiny home. If its far enough away its cheap....

I don't think it needs to be freehold, a right to occupy may work ok

.... rest homes do it

by Flying high | 29th Apr 24, 7:52am 1714333935

A LSB next to a gated community, one of them laid a complaint

That says everything abiut rich snobs... I'm rich AF but would never dream of interfering with quiet neighbours on their own land.