Why this is a good time to be a first home buyer

While this is a challenging property market for many people, first home buyers are doing relatively well, due to several factors working in their favour, according to CoreLogic.

During the first three months of 2024, first home buyers accounted for 26% of all purchases, compared to the long-term average of 21%. Also, while 69% of all buyers purchased houses, 73% of first home buyers did.

“Factors for this FHB [first home buyer] strength have included lower prices since the peak, access to low-deposit finance at the banks via the LVR [loan-to-value ratio] speed limits, the ability to use KiwiSaver for the deposit (or at least part of it), and of course less competition from other buyer groups. FHBs are also willing to compromise on location and/or property type,” CoreLogic said.

“Not only that, but FHBs have been getting more bang for their buck lately too. The median price they’ve paid has come down, from $715,500 in 2022, to $699,000 last year, and $695,000 so far this year. That’s despite standalone houses (bigger properties) representing a higher share of FHB purchases this year than in 2023, which essentially signals that FHBs are getting good deals in the current market conditions that are favourable for purchasers.”

CoreLogic also found that first home buyers paid a median price of $695,000 in the first quarter of this year, which was lower than that for all buyers ($768,000) but significantly higher than the bottom 25% of buyers ($565,000).

“In other words, the typical FHB doesn’t always enter at the bottom of the market and work their way up – many actually enter the market well above the bottom rung of the ladder,” according to CoreLogic.

First home buyer outlook

Looking ahead, CoreLogic forecast that above-average first home buyer activity would continue this year and possibly into 2025, particularly given other buyer groups, such as investors, were still facing challenges.

“It’s never easy to buy that first property, but FHBs have remained consistently active since late 2022 and many of the key factors that prompted them to act then remain in place today,” CoreLogic said.

“Of course, there’s never any guarantee and FHBs might not have things all their own way, given that 80% interest deductions are back, the CCCFA and LVR rules are set to loosen and that there’ll be a shorter Brightline Test from 1st July.”

Buying your first home is a rite of passage for Kiwis. But it can also be daunting, because the process is new. So please reach out to me if you (or your children) would like to enter the market. I’ll let you know whether you’re ready to buy, calculate how much you can borrow and explain the process from beginning to end. If you decide to proceed, I’ll make things easy for you by managing your loan application.