Despite stretched affordability, high interest rates, and cost of living pressures, first home buyers (FHBs) in New Zealand continue to lead the market in purchasing activity, highlighting the continued strong appeal of having a 'foot on the ladder'.
CoreLogic’s six-monthly First Home Buyer Report released today shows FHBs accounted for 27% of purchases in the third quarter, a new record high. Over the year to date, FHBs sit at 26% market share, comfortably above the long-term average of 21%, however the number of deals still sits below past norms in a relatively subdued market.
NZ Chief Property Economist Kelvin Davidson said despite some key challenges for all buyer groups, FHBs are still finding a way.
“Whether it’s using the low-deposit lending speed limits at the banks, tapping their KiwiSaver to help with their deposit, securing First Home Grants or First Home Loans, or compromising on the size or location of their home, FHBs are proving relatively more successful in buying their first home than at any other time,” Mr Davidson said.
The national trends are being reflected across the main centres, with all six areas recording above-average shares of FHB purchases so far in 2023.
Wider Wellington has held the strongest market share for FHBs with 33% of purchases in the year to date (4% above normal). At the other end of the spectrum, FHBs in Tauranga held 21% of purchases (5% above normal). Auckland, Christchurch, and Dunedin each report 5% higher than average, with Hamilton 6% above for 2023.
Provincial markets show a similar trend with Invercargill holding the strongest market share for FHBs with 32% of purchases, a significant 10 percentage points higher than the long-term average. Whangarei and Rotorua are other examples of ‘FHB hotspots’, as are smaller areas such as South Waikato and Clutha.
FHB median price
FHBs have benefitted from the wider downturn in property values over the past 18 months, with the median price paid by the cohort falling from $720,000 in 2022 to $690,000 in 2023 to date.
Mr. Davidson said the typical FHB often enters the market above the 'bottom rung', rather than starting from the bottom.
“For example, $690,000 is lower than the median price paid across all buyers at $762,500, but it’s significantly higher than the lower quartile across all buyers at $565,000.”
Auckland is the main centre where FHBs pay the most at a median of $875,000 in 2023, $107,000 less than the all-buyer median of $982,000. Median FHB prices paid range between $700-$750,000 in each of Tauranga, Wellington, and Hamilton, and sit at $600,000 in Christchurch, and $530,000 in Dunedin.
Purchase price paid Q1-Q3 2023