First home buyers enjoying their slice of the action

Property

Latest Reserve Bank monthly figures show first home buyers getting a record high share of new mortgage money last month

29th Jan 19, 3:50pm by David Hargreaves

By David Hargreaves

First home buyers enjoyed a record high share of the mortgage money handed out by the banks in December, according to the Reserve Bank's latest monthly borrowing by lender type figures.

The latest figures do emphasise the big drop-off in house buying that occurred in December as highlighted by the recently released Real Estate Institute of New Zealand figures for the month.

However, the overall tally of mortgages advanced during the month, at $5.371 billion, is in fact up about $300 million on the same month a year ago.

It is, however, down by around $850 million from the amount of mortgages advanced in November.

The FHBs have been gradually building their overall share of the borrowing the in past year - as well as borrowing increasing amounts in actual dollar terms.

In the latest month the $924 million borrowed by the FHBs accounted for 17.2% of the total advanced by the banks, which is a new high in a series that the RBNZ has now been publishing since August 2014.

One noteworthy point in the latest figures is that the RBNZ has issued a "special note" on the figures.

Since October it has been noticeable that the overall share of mortgage money going to investors has dropped sharply, from somewhere just above 20% to around 17.5%.

However, the note, dated January 29, says that In October 2018, a "major bank" made a reclassification to their ‘commitments use’ reporting.

"This resulted in a reclassification from “investor” to 'other owner occupied'. The series now show a lower amount of “investor” purpose loans from October 2018 onwards. This impacts both the C31 and C32 tables," the note says.

The RBNZ doesn't say which bank has reclassified its loans or what the specific impact is on the figures.

The mortgage figures from January onward will be watched with a great deal of interest, as the RBNZ has relaxed its loan to value ratio (LVR) restrictions from the beginning of this month.

A similar move in January last year did seem to have an impact, particularly in respect of more FHBs coming into the market.

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79 Comments

by iconoclast | 29th Jan 19, 4:10pm 1548731421

You know, because it has been stated before ....

A migrant with a pocketful of loot who has never bought in NZ before is a FHB

An NZ local native buying their first home (anywhere in NZ) is a FHB

So who are these FHB's you talk about? All local strugglers? Wishful thinking

by skudiv | 29th Jan 19, 7:17pm 1548742657

Whoever they are, they are borrowing a lot, which is great news for the banks!

by cmat | 30th Jan 19, 6:31pm 1548826313

Yep, pyrrhic victory if you ask me.

by saving4AUhouse | 29th Jan 19, 4:29pm 1548732596

Buying High, Selling Low

by GV 27 | 30th Jan 19, 9:59am 1548795558

...or maybe just buying something because they can't put their lives on hold any longer.

by Taubin | 30th Jan 19, 11:21am 1548800496

And they aren't making anything leaving their money in the banks.

by cmat | 30th Jan 19, 6:33pm 1548826389

Why make a tiny amount when you could lose it all, amirite?

by Retired-Poppy | 29th Jan 19, 4:47pm 1548733621

"FHB's enjoying their slice of the action, grin from ear to ear while signing mortgage documents in a suckers market"

Lets celebrate the increasingly stable fundamentals of the NZ housing market shall we - NOT!

by saving4AUhouse | 29th Jan 19, 4:48pm 1548733702

Nonsense. I have it on good authority here that past performance is a guarantee of future results.

by Retired-Poppy | 29th Jan 19, 4:52pm 1548733952

Ha-ha-ha :) Oh those property seminars are just so inspirational....:-)

by skudiv | 29th Jan 19, 7:29pm 1548743347

Losers and Doom Gloom Merchants, not content to be paralyzed by their own fears, trying to project them onto others and can't stand to anyone succeed. I just sold the first rental I bought waaay back in 2015 for double what I paid for it, OR a 500% profit on my 20% deposit. Of course I would never have bought anything if I had listened to the Losers who have been predicting doom and gloom for eons. Some of the names change, but the message does not. First rule of getting ahead is "Stay away from the Losers"

by saving4AUhouse | 29th Jan 19, 7:38pm 1548743880

What a load of projecting nonsense.

I have no desire to buy a house here, and I don't begrudge anyone who has made money in this real estate bubble. All I take issue with is this notion that it will last forever when every economic indicator suggests it's completely out of whack with all other metrics.

Face it, you had no idea what the market would do in 2015, you made a risky gamble and it paid off. That doesn't mean anything.

by Independent_Observer | 29th Jan 19, 7:43pm 1548744215

The guy who put somebody else's money (bank depositors cash) all on red at the roulette table (NZ housing market) is showing off at how good he is at playing god. Ask him to do it again.

by skudiv | 29th Jan 19, 8:26pm 1548746792

The odds of me doing it again are orders of magnitude higher than they are for a doomer every getting anywhere. Four aces isn't gambling, doing nothing isn't gambling either, you are guaranteed to never achieve anything!

by Independent_Observer | 29th Jan 19, 10:37pm 1548754645

So you're buying back into the market then? Want to show us the listing you're buying?

Is four aces like credit rating agencies rating debt prior to GFC? Got to be good, real estate agent told me this is a four aces housing investment...

by kiwimm | 30th Jan 19, 9:54am 1548795284

I'll see your four aces with my royal doomer flush

by skudiv | 30th Jan 19, 1:21pm 1548807708

I'll call that bluff.

by cmat | 30th Jan 19, 6:37pm 1548826671

Are you going to keep your proceeds in cash for now... or plough it back in to housing with as much leverage as possible?

by skudiv | 29th Jan 19, 8:21pm 1548746460

Of course nothing means anything if it disagrees with your own opinion. Doomers always see and fear the worst, and interpret everything through that lense. Everything is a risky gamble and they never do anything.

by saving4AUhouse | 30th Jan 19, 12:21pm 1548804075

You have no market insight. You took a gamble, it paid off well for you, and now you're trying to use that as truth that you're clever or have divine providence.

Price-to-rent ratios are insane
Price-to-income ratios are insane
We're a tiny market in a tiny economy vulnerable to bad economic weather, it's a high risk situation for a new property investor in this place in time, in this place on earth. If you think that's Doom and Gloom then I have some lottery tickets to sell you.

by Nzdan | 29th Jan 19, 7:57pm 1548745059

Looks like somebody didn’t get much attention when they were a child.

by skudiv | 29th Jan 19, 8:29pm 1548746961

It's true, I was in foster care and had a hell of a time as a child. Left school at 16 and retired at 35. Retirement didn't suit me though, I want to make a lot more money. What's your excuse?

by Nzdan | 29th Jan 19, 8:35pm 1548747313

I was born with SIDS.

by skudiv | 30th Jan 19, 10:12am 1548796321

Wouldn't have been much of loss if you had.

by Nzdan | 30th Jan 19, 10:47am 1548798452

Woahhhh. Somebody has some deep rooted issues they need help dealing with. I get there's a bit of banter on this site, but your personal attacks against strangers on the internet are next level.

May I suggest investing some of your capital gains on some counselling sessions?

by Retired-Poppy | 30th Jan 19, 12:33pm 1548804783

Nzdan, what about all those innuendos you post. You know, the ones aimed at those liberated themselves from debt? It seems not to matter how hard commentators might have work for it, you seem to have a problem with it.

One is left asking, how successful do you REALLY feel.

by Nzdan | 30th Jan 19, 12:43pm 1548805430

I called you Whistle Tooth and posted some little "old man" parody of your incessant need to criticize anyone who has a mortgage as being foolish. I guess it had the desired effect because it got you riled up, so I feel very successful.

by Nzdan | Mon, 28/01/2019 - 11:44
up1
I think RP is trying to wish a little bit of misfortune on to you.

"These greedy little whippersnappers with their Interest Only mortgages making a profit at the expense of my Term Deposit rates, by golly they'll get their comeuppance just you wait. They don't call me Retired "Schadenfreude" Poppy down at the bowling club for nothing."

He's probably got a severe case of Whistle Tooth going on as well.

by Retired-Poppy | 30th Jan 19, 1:02pm 1548806546

Nzdan, deep down, how successful do you really feel? Anyway, I repeat, my issue is with interest only loans derived from speculation enduring in a clearly weakening RE market. Perhaps you are entering a state of debtors paranoia as you've once again wrongly assumed my criticism was aimed at you ;-)

If your mortgage happens to be an interest only one, don't take it out on me. Try diverting your energies towards LIBERATING YOURSELF! Where interest is concerned, it's better to receive than to give. Trust me.

by Nzdan | 30th Jan 19, 1:08pm 1548806900

Feel very successful. Why, are you trying to sell me something?

No paranoia here, I was having a discussion with Yvil on Interest Only mortgages and once again along came Rhetoric-Poppy to derail the thread so I mocked you for it. I've mentioned my mortgage details on here before, it's $160k P & I.

by Retired-Poppy | 30th Jan 19, 1:27pm 1548808026

Nzdan, I think you've got a problem with those who are debt free. No point in sugar coating what you really feel. I for one worked hard for it. You have to possess the right attitude to factor this possibility in.

Anyway, all the best.

by linklater01 | 29th Jan 19, 8:52pm 1548748356

Skydiving,

That’s a great story. And I reckoned I had done well to retire at 57 but after well over 30 years work,I have been happily retired for the past 16 years,having moved from Scotland to NZ.
I would be fascinated to hear how you achieved it.

by nymad | 29th Jan 19, 9:10pm 1548749408

How did skudiv achieve it?

Easy. He just embellishes his sickness benefit as being a retirement fund.

by Independent_Observer | 29th Jan 19, 10:32pm 1548754366

No need to do any work in the productive economy in NZ Nymad...just retire at 35 and buy/sell houses using bank leverage then abuse anyone who takes fault with your desire to contribute (or not) to society.

by theglc | 30th Jan 19, 9:28am 1548793725

If Skidiv has made his fortune legally then good on him! well done!

I do feel like it might have been more luck than good management as he seems unable to change his opinions when all the data and facts change.

by skudiv | 30th Jan 19, 10:03am 1548795794

On the contrary, it is my ability to change my mind when the facts change or even when the facts haven't changed but my understanding changes aka learning, that has caused me to achieve. There are people on this site who have been expecting a housing crash since 2009 or earlier, and they still believe they are right.

by taimaiakka0 | 30th Jan 19, 4:40pm 1548819627

Correct as Warren Buffett said READ the market and decide if want to make money in share market or even housing market.

Currently anyone can see that housing market is on downhill and will not be long before the media and powerfull lobby admits - for how long can one do sugar coating as soon data will catch up.

by saving4AUhouse | 30th Jan 19, 12:28pm 1548804495

Mate if it was that easy we'd all be doing it.

by skudiv | 30th Jan 19, 10:11am 1548796260

Nah I left home at 16 spent my teenage years drunk and on drugs, then I grew up got married, had kids, saved money, put it into farmland and eventually a couple of rentals paid cash for a lifestyle block and chilled out for a couple of years. Now I'm going more into farming which is why I need the cash from my rentals only made 130k this year, should more than double that to 300k next year.
Of course I could have complained about life handing me lemons, or four aces is too risky etc.

by Independent_Observer | 31st Jan 19, 7:51pm 1548917504

Take it those drugs were cheaper than smashed avo on toast...wouldn't want to spend money on anything other than saving money for a house deposit.

by Shoreman | 30th Jan 19, 8:15am 1548789307

Well said Skudiv the reality of life is in some minds ' the time is never right ' and negative thoughts override logic and decisions are not made. There is always something bad on the horizon to focus on if you look for it. Do your due diligence, don't over commit, work hard to pay down the debt, this a combination that has returned great returns over time.

by skudiv | 30th Jan 19, 10:00am 1548795608

There are always plenty of reasons for doing nothing, and plenty of people also doing nothing to provide with all the confirmation bias you need.

by saving4AUhouse | 30th Jan 19, 12:29pm 1548804544

Well said Skudiv the reality of life is in some minds ' the time is never right '

Nonsense. The time is just wrong for NZ. It's right for many Australian cities.

by Retired-Poppy | 30th Jan 19, 12:47pm 1548805631

Shoreman, your favorite Fund Manager (Milford) has fallen out of love with Auckland housing as it will follow Sydney - down. Is it time to ditch all those interest only loans perhaps?

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…

Its an indictment on our economy that many specufolk such as yourself and Yvil are STILL hammering away at an expiring investment strategy (interest only loans), believing future results will always match the past.

What say you now?

by richard1965 | 30th Jan 19, 3:45pm 1548816355

In Housing bubble many made money and lucky for you but also many have / are loosing money who bought in 2016 onward on high price and are now trying to sell but are not getting what they paid 3 years ago.

So anyone who has been buying and selling for number of years and have made profit in few transaction and lose money in the last transaction is fine as overall made profit but those who entered at last stage of the boom are …….specially if they do not have holding capacity.

by Pragmatist | 29th Jan 19, 4:52pm 1548733935

In May, Sept, October and Dec 2018 FHB made up >10% of the Number (not $) of the mortgages. (For 2018 they made up 16.2% of the $ value)
And the FHB average mortgage value has tipped over $400k again. (Also May and Jan 2018, and July 2017)
Not quite hitting the record, but 32.07% of those mortgages to FHB were >80%LVR.

I hope for their sakes the market doesn't tank, and only stagnates for the next 8 years or so.

by Retired-Poppy | 29th Jan 19, 5:00pm 1548734454

...agreed. It would have to stagnate for at least eight more years to return to anything near sound fundamentals. There has to be no global shock of significance within the said eight years too. Given mans remedial achievements since 2008, Such a scenario is looking rather impossible.

by stuart786786 | 29th Jan 19, 9:48pm 1548751715

Fear psychologyof FHB and best exploited by estate agents and media (influenced by powerfull rich lobby) by trying to hide the truth as even mentioned in the article below that vested interest / media sugar coat the truth to try and misguide and FHB entering the market at this last stage will be hard hit.

This is the time to believe in 'Patience is virtue'

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…

by taimaiakka0 | 30th Jan 19, 10:01am 1548795717

In November / December all real estate agents were down - feeling low but in January in new year are very hopefull and have come out with positive attituted - It has to be wait and watch if their attitute will prove to be right or......

In December for a house in Farm Cove agent was encouraging any buyer in mid 900s and in January has raised the price 1050000 and will be hoping to get a million and this positivity is with most real estate agents.

Febraury / March will be the deciding factor - direction of housing market in NZ.

Game on

by richard1965 | 30th Jan 19, 3:54pm 1548816894

Correct FHB should buy house as is good for long term but now having already miss the boom, is the time to wait and watch instead of rushing atleast for first quarter of 2019.

Also for FHB to make money in next move will depend on what price they buy and anyone can advise that now is the time to wait and watch atleast till April (Definitely all FHB should buy and enter property market and not wait endlessly but waiting for few more months now will do no harm instead may help as price may go Down but will definitely not going up)

by Withay | 29th Jan 19, 4:55pm 1548734144

"This resulted in a reclassification from “investor” to 'other owner occupied'. The series now show a lower amount of “investor” purpose loans from October 2018 onwards.“ - What kind of witchcraft is this? And for what purpose?? All it’s doing is skewing the data.

by Pragmatist | 29th Jan 19, 5:07pm 1548734837

You beat me to it, I was just trying to see what percentage of the lending was for investments and stumbled across that foot note. Amazing how a bank can redefine what i would think are fairly obvious meanings. "Owner occupier" doesn't really seem that fuzzy to me.

by Withay | 29th Jan 19, 6:39pm 1548740391

Agreed, it’s just nuts. I would love to hear the rational behind it.

by Chairman Moa | 29th Jan 19, 5:02pm 1548734564

I'd wait a little if I was a FHB.. may be 'til end of the year to get a better picture
https://mobile.nzherald.co.nz/business/news/article.php?c_id=3&objectid…

by GV 27 | 30th Jan 19, 10:02am 1548795728

We're now three years past a traditional cycle correction. Unfortunately some clocks keep ticking whether you want them to or not and people are left without a choice, or raise a family in increasingly expensive and unstable rental accommodation.

by RickStrauss | 30th Jan 19, 10:46pm 1548841619

Unstable rental accommodation eh...sounds like a good reason for improving stability in the rental market.

by THE MAN 2 | 29th Jan 19, 5:06pm 1548734786

Seriously, I can see why so many on Interest.co are able to moan about how high house prices are in Auckland especially!
While you have been on here moaning and hoping prices tank, investors and homeowners have been making millions!
Reality is that house prices are just fine in most parts of NZ and is a great country apart from our current government that will be gone next year,

by Voiceofreason | 29th Jan 19, 5:56pm 1548737805

If you think 9 times income or thereabouts, third highest in the world, is just fine, good luck to you. Not a great time to invest, or to be a FHB. The steep upward trend of capital gain is behind us. Yes, if you missed that, or haven’t taken profit off the table yet, well...

by Yvil | 29th Jan 19, 8:52pm 1548748323

VoR, how many years experience do you have as a property investor?

by Pragmatist | 29th Jan 19, 9:03pm 1548749008

Yvil, how many real estate bubble pops have you been through as a property investor?

by Nzdan | 29th Jan 19, 9:31pm 1548750718

Yvil doesn't have to worry, his bank will continue to extend Interest Only mortgages to infinity.

by Yvil | 30th Jan 19, 12:20pm 1548804000

Indeed, btw that doesn't mean I don't pay back principal, I just do it only own terms

by Yvil | 30th Jan 19, 12:12pm 1548803534

I've been through the GFC if you call an 8% drop in values a "bubble pop". Otherwise your question is silly because there hasn't been a "pop" in the last 30 years in NZ

by Pragmatist | 30th Jan 19, 1:46pm 1548809182

So you have no experience as a bubble pop investor.. interdasting.

by Voiceofreason | 29th Jan 19, 10:46pm 1548755164

20 years investing in general but not only property. I don't like NZ or Oz property right now (or for the next few years I'd say), as I've said, they are bubbles - Australia's is bursting as we speak. Have owned property in both countries, still do in NZ. I think most share markets are significantly overvalued too (but still own some stocks not bought recently). The sidelines of property and shares have looked good to me in recent times, until assets look undervalued, which could be soon for some. It doesn't mean I've been idle in terms of investing though.

by Yvil | 30th Jan 19, 12:18pm 1548803925

Thanks VoR and well done to you. Why do you still own property in NZ when you say that NZ is in "a bubble that's about to pop"

by keenaucklandobserver | 30th Jan 19, 3:39pm 1548815968

probably wants to buy more when it truly pops?

by Chairman Moa | 29th Jan 19, 7:16pm 1548742590

"our current government that will be gone next year"

TM2 you have earned 650 social credit points for being so optimistic!

by Ex Expat | 29th Jan 19, 5:10pm 1548735058

My latest CoreLogic figure is 94.78% of 2017 CV, but paradoxically a local leafy suburb house on the market since October (way overpriced) just sold for 113% of its 2017 CV, a 7% uplift on its 2016 sale price. Evidently there is still money out there and it pays to be patient, if you have the right property.

by Retired-Poppy | 29th Jan 19, 5:22pm 1548735777

Ex Expat, your house assessed value has slipped at least 5% since November? It certainly does depend on what it is and where it is. It's been like that for over a year now. No matter the times, there's always money out there for the right property.

by Ex Expat | 29th Jan 19, 5:24pm 1548735871

Yes, at one stage there it was just over 100% of 2017 CV, so down ~ $130,000. That said, my property is superior in every way to the just sold property. Not that that matters as we never intend to sell.

by shaok | 29th Jan 19, 7:07pm 1548742022

The main problem is that not all CVs are created equal...they are a excel spreadsheet driven analysis with limited actual application to the real market (as well as being backward looking).

It is a proportioning exercise for rates yet we rely on them so much for back of the envelope value analysis. I forecast that the sale prices achieved will be all over the spectrum in terms of % relative to CV for the next couple of years...I have already seen 10 - 20% under CV for some properties and others at 10 - 20% above...

by Pragmatist | 29th Jan 19, 9:01pm 1548748915

There are usually reasons for those variances. Saw one go recently for about 25% under RV.. pretty good for a leaky rot box. Another one that was coming up in my searches was asking $550k under RV of $1.2m and didn't get any bites as far as I know, but a three story leaky rot box on a steep section isn't going to move in a hurry, since it's probably cheaper to demolish and start again.

by nymad | 30th Jan 19, 8:30am 1548790245

"they are a excel spreadsheet driven analysis with limited actual application to the real market"

The modern day equivalent to the "Calculator?! No way, he just works it out with a pencil and pad".

You will be happy to know that no, the valuations are not based on an "excel spreadsheet driven analysis."

by Sluggy | 30th Jan 19, 10:23am 1548797025

I noted over the break monopoly money also comes in the x,000,000 's now.

by Penguin | 29th Jan 19, 9:15pm 1548749734

Good to see the FHB coming back. In theory house prices should be falling las in Aus but with the Kiwibuild disaster and shortage of labour the housing shortage is here for years to come.which will keep prices relatively high.

by Tui12 | 29th Jan 19, 10:20pm 1548753621

For the love of God there is no housing shortage, its been documented to death.

by Averageman | 30th Jan 19, 11:32am 1548801157

Foreign buyers gone, speculators arms tied and hitting the ejection handle, immigration falling, house shortage shown to be fabricated, and the winner is....fhb yeah right. Sales volumes are tanking...more so fhb aint saving anything. Aussie has set the pace...down...and the little brother is following. Even cheerleader herald is printing that story.

2019 is going to be the year a lot of agents sell their cars and stop eating squashed advo as sellers refuse to accept reality. The big change will be when the banks tighten the lending lolly scramble. Anyone buying this year must really really need that house, and some will.

Sales to continue to thin, and drop in dollars (agents don't really care about you sale price...just that it sells). Expect agents to be getting training in how to "condition" sellers down, just like 2008

by bilbo | 30th Jan 19, 12:43pm 1548805390

immigration falling ...

Just because they use a new ruler doesn't mean it's falling. Seems like some of the fired Volkswagen emissions scientists got jobs at Stats NZ and LINZ.

Immigration drops from 60k to 40k in one month... foreign buyers 3%. Laughable.

by Casual Observer | 30th Jan 19, 12:44pm 1548805499

Queenstown is slowing: https://www.odt.co.nz/regions/queenstown/clamps-sales-slow-queenstown

And "Development and humans are the problem." in Queenstown's water quality woes. Yes folks Queenstown does have water quality issues too. https://crux.org.nz/community/weve-not-done-enough-things-need-to-chang…