First home buyers snapping up more than 1 in 4 properties

First home buyers purchased 27% of all properties sold in the third quarter of 2023, according to CoreLogic, which was a record-high market share.

Over the first nine months, first home buyers (FHBs) had a 26% market share – well above the long-term average of 21%.

At a city level, Auckland, Christchurch, Dunedin, Hamilton, Tauranga and Wellington also recorded a first home buyer share that was higher than their local long-term average.

“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,” CoreLogic said.

First home buyers buy cheap but not at the bottom

Another thing playing into first home buyers’ hands was the fall in property prices – across New Zealand, the median price paid by first home buyers was $720,000 in 2022 but only $690,000 over the first nine months of 2023 (compared to $762,500 for all buyers).

Interestingly, though, the median price for the bottom 25% of homes was $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.

How first home buyers are likely to fare in 2024

“Overall, then, it’s remained a strong market lately for first home buyers, with many key factors still in their favour. And looking ahead, it wouldn’t be a surprise to see first home buyers continue to hold onto an above-average share of property purchases in the next six to nine months as well,” CoreLogic said.

However, with the change of government and the slow softening of the tax system for property investors that lies ahead – namely a shorter Brightline Test and the full reinstatement of mortgage interest deductions – first home buyers may not have things all their own way forever. To be fair, we don’t expect a flood of investors coming back to the market, but some will, and this will be extra competition for first home buyers.”

Do you know anyone who wants to buy their first home? If so, please refer them to me so I can explain how the buying process works – particularly around qualifying for a home loan – talk them through the government incentives and manage their loan application.