Many first-home buyers have accepted they have to compromise to get their foot in the door, says CoreLogic’s new CEO Ben Speedy.
And that may be the reason for an uplift in the number of people buying their first property.
“Our data shows we’re seeing them go to more affordable, previously less-common suburbs and they’re purchasing properties there,” Speedy says.
“For example, Wattle Downs in Manukau has grown in popularity for first-home buyers over the last 10 years.
“Those compromises are part of the reason why we’re seeing a resurgence in first-home buyers.”
Boost in first-home buyers
Speedy says CoreLogic data shows a slow-down in investor buying, but an increase in first-home buyers.
“Property investors, or more accurately speculators, have been a significant focus for both the government and Reserve Bank of NZ.
“The heavier restrictions on property investors have opened the door for some first-home buyers who were unable to compete in the hot market, but have increased their share of sales from 18 per cent in 2014 to 24 per cent in the second half of 2018.”
First-home buyers are also compromising on home type, he says.
Many first-home buyers are happier looking at townhouses now, where previously they held out for detached homes.
In regional economies, like Palmerston North and Hawke’s Bay, values are continuing to rise, Speedy says.
“You’ve got a lot of two-income families, perhaps one’s a teacher, the other might be the local police officer, and they can afford properties because they’ve got a good income.
“But in Auckland, it becomes a lot harder from an affordability perspective to be able to get a loan, because of the property price in Auckland.”
He says property prices come down to supply and demand and that’s usually dictated by what the economy does.
“We see house prices nationwide remaining relatively flat,” he says.
“There are some obvious headwinds which are well publicised – a possible capital gains tax and the need for banks to be able to hold more capital. But fundamentally people know property, it’s one of New Zealand’s largest investments, so people will continue to invest in it.”
KiwiSaver kicks in
KiwiSaver is really starting to come on-stream for first-home buyers, says Speedy.
“More and more people are now accessing their KiwiSaver funds to assist with their first home deposit. With the average individual withdrawal over NZ$22,000, couples entering together have a sizeable boost to enter the property market.”
The numbers will grow, he predicts.
“There are fortunate young people who have parents contributing to their KiwiSaver accounts. When they come to buy a house, they’ll have a real little nest-egg. Over time, that will help more first-home buyers.
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Published 20 March 2019
Story by Brenda Ward, JUNO
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