Key Facts
- First home buyers accounted for 26% of property purchases in the first quarter of 2024, which is higher than the long-term average of 21%.
- Buyers are taking advantage of lower property prices and less competition.
- The median house price dropped to $695,000 in Q1 2024, compared to $699,000 the previous year, and $715,500 in 2022.
- Despite high mortgage costs compared to rents, most first home buyers are purchasing for reasons such as stability of tenure rather than due to financial reasons.
- The First Home Buyers activity is expected to continue into 2025, particularly as other buyer groups, like investors, still face challenges.
Article Summary
The latest data suggests that first home buyers in New Zealand are capitalizing on the downturn in housing prices and reduced market competition. According to CoreLogic’s biannual First Home Buyer Report, this group made up 26% of all property acquisitions in Q1 2024, a noticeable increase over the long-term average of 21%. Lower deposit requirements at banks, along with First Home Buyer (FHB) grants and loans, have helped facilitate this trend, despite house buyers often opting for less ideal properties or locations.
Despite a small surge in price growth at the end of 2023, increased listings in the early months of 2024 have led to a slowdown in property values, making conditions increasingly buyer-friendly. The median house price has fallen to $695,000 in Q1 2024 from $699,000 in 2023, and $715,500 in 2022. Interestingly, data shows that FHBs typically don’t start at the lowest end of the market, with many purchasing properties well above the lower quartile, where the median price is $565,000.
Despite a sharp rise in mortgage rates making homes more costly compared to rent, many first home buyers are still entering the market. It appears that the principal driving factors behind this trend are non-financial, such as the desire for stable tenure. Based on the current data and market conditions, the increased activity from first home buyers is expected to extend through 2024 and potentially into 2025, especially as other buyer groups like investors continue to face challenges in the market.
