Duncan Garner: I’ve found the good news in our flat economy - don’t miss out
First home buyers appear to be doing better so, let's hope it lasts. Photo / Getty Images
If nothing else, I want this column to end up in front of one of New Zealand’s most unlucky and most overlooked or ignored groups: our first home buyers. I want them to feel a little more hopeful than they might have in the past 10-20 years.
To take the first steps on to the property ladder at any stage during this time has meant unbelievable sacrifice, hard work, the bank of mum and dad, maybe a Lotto victory or some incredible luck. It might mean all of the above.
Right now, however, first home buyers appear to be doing better: a CoreLogic report finds 26% of house sales in the first quarter of this year went to first home buyers, against a historical average of 21%. In March, according to the Reserve Bank, 2447 mortgages were approved for first home buyers, up 7.7% on a year ago (though still well below the peak of 3338 approvals in December 2020).
Recently, I went to an auction where six houses were up for sale. The first one sold for a record $3 million after its owners were told to expect $2.5m max. That might have looked like things were off to a flying start, but the other five houses were passed in. Why? No buyers.
Mum and dad investors, and even some of the bigger high rollers and developers stayed home. They are gun shy - they need more certainty and aren’t desperate to trade when money is expensive, and returns are harder to come by. They don’t need to be in too deep so have chosen to stay away.
In his most recent survey of real estate agents, economist Tony Alexander says they have witnessed a big increase in first home buyers being successful because the pressure to compete against others has disappeared - for now.
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. The utter despair and abandoning of hope of getting into the market has now been replaced with some genuine light at the end of an exhaustingly long tunnel.
First home buyers are being cautious about the price they pay. According to CoreLogic, the average price paid by a first home buyer in the first quarter was $695,000, down from $715,500 in 2022. That’s despite standalone houses (bigger properties) representing a higher share of purchases.
More homes are being listed, too: the number of properties on the market has risen 23% in nine months to sit at a nine-year high of 30,400 units, says CoreLogic.
With more choice and less competition comes the opportunity for first home buyers to walk away if they feel the price is even a tad over what they’re prepared to pay. Previously, they might have tried to rustle up a bit of extra cash and put themselves under further pressure.