First home buyers are maintaining strong market share even as they battle affordability constraints, according to CoreLogic.
The share of purchases across the country by first-home buyers increased to 27% in July — well above the long-term average of 21%, and up from 26% in the second quarter.
First home buyers purchased more than 11,000 properties in the first six months of 2024, up from around 9400 in the same period last year, CoreLogic NZ chief property economist Kelvin Davidson said.
Davidson said first home buyers had been taking advantage of the low deposit lending allowances being offered by banks.
"Given the recent loosening in the loan-to-value ratio rules it's interesting to see that [first home buyers] currently absorb 75-80% of banks' overall allowance for low deposit lending to owner-occupiers.
"Put another way, two in every five [first home buyers] get into the property market with less than 20% deposit, and the Reserve Bank's rate-cutting cycle is likely to reinforce their presence."
At the same time, he highlighted the greater number of listings currently on the market as giving more choice for buyers in general, and first home buyers in particular, which is also feeding into weakening price pressures.
"Total listings sitting on the market are around 25% higher than the same time last year, meaning many buyers can probably get a cheaper price and a better house than they thought," Davidson said.
Davidson also said the fall in interest rates was unlikely to fuel a fresh boom given other factors at play.
The Reserve Bank last week cut the Official Cash rate and mortgage rates have been falling.
"Inflation is now trending back down to the 1-3% target band and as things stand there seems to be a reasonable chance that 'typical' mortgage rates could drop to around 5.5% by the end of 2025," he said in a media release.
"Undoubtedly, the major turning point for mortgage rates is here, and that will be a support for housing. But a fresh boom doesn't seem likely when jobs are being lost and the economy remains in recession."
Around 64% of New Zealand's existing mortgages by value are currently fixed and due to re-price onto a new mortgage rate over the next 12 months.
Davidson said housing values have "well and truly lost momentum".
"Across the main centres, Wellington remains with the largest decline from the peak, at 21%. Meanwhile, the smallest decline has been in Christchurch with values falling 7.1%, and also a market where the share of property purchases by first-home buyers is higher than the national figure, at 28%."
SHARE ME