Number of first home buyers falls
The number of first home buyers getting through the door of the property market has dropped slightly. The latest CoreLogic monthly property market and economic update indicated the first month of the 2017 quarter showed steady investor activity — while the previous recovery of first home buyers has dipped slightly.
This comes as new figures showed net migration had hit a record high — putting more pressure on the country’s housing markets.
In January, 20.1 per cent of sales were to first home buyers, compared to 38.6 per cent to investors.
These figures reflected a drop of 0.8 per cent in first home buyer sales, from 20.9 per cent and a slight decrease in investor sales from 38.5 per cent in the final quarter of 2016.
CoreLogic senior research analyst Nick Goodall said the drop in first home buyers was more evident in Auckland.
“It probably makes sense, given the prices.”
However, he cautioned against seeing the dip as part of a long-term trend.
“I don’t expect it to be a massive change with first home buyers dropping out of the market.”
QV national spokeswoman Andrea Rush said there were too many factors at play to say whether this month’s dip in first home buyer sales would continue. However, she said the strong growth in many parts of New Zealand that were continuing to push prices up made it harder for first home buyers.
“They have also been facing strong competition from investors wanting high yields from entry level property in the more affordable regions.”
She said new LVR restrictions requiring a 40 per cent deposit for investors had eased pressures somewhat in the more expensive markets such as Tauranga and Hamilton.
“But in places such as Rotorua, the Hauraki District and Dunedin where the entry level is lower they are still facing competition from investors in lower priced areas.”
Rush said having banks continue to tighten lending criteria for investors but ease criteria for first home buyers could help those not already priced out of the market, “but not if home values continue to rise at the pace they have sold since 2007”.
Rush said work to increase supply would also be beneficial as would greater research into the level of foreign ownership in New Zealand’s residential housing market.
REINZ chief executive Bindi Norwell said, “In light of the fact the data in question is January data, with January being one of the less popular months for housing activity due to the holiday period, we would recommend allowing for three months of data before making any predictions.”
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