Why first home buyer market share has reached record-high levels

The past two years have been quite favourable for first home buyers (FHBs), due to a reduction in buyer competition and property prices. And conditions continue to suit FHBs, CoreLogic Chief Property Economist Kelvin Davidson recently told Trade Me.

“Indeed, since the second quarter of last year, their percentage share of property purchases has been 25% or more, and across July and August this year has edged up even higher to 27% – a new record high,” Mr Davidson said.

“In addition, the number of FHB deals has also been pretty resilient. Across each of the main centres, FHBs’ percentage market share has recently been running in the high 20s or even early 30s, but regional areas have also seen solid activity too. Invercargill, for example, has had a 31% market share for FHBs so far in 2024, with Palmerston North and Rotorua both at 30%. Into South Waikato, as an example, the figure has also topped 30%.”

First home buyers making the most of market conditions

Mr Davidson identified several reasons why the times were currently suiting first home buyers. 

“Clearly, access to KiwiSaver for at least part of the deposit is a good start (especially if two or more people are joining their funds together), even without the extra assistance that was previously often possible via the now-extinct First Home Grants system,” he said. 

“FHBs also continue to show a willingness to compromise on the property type and/or location, such as looking for a townhouse further away from city centres, rather than perhaps looking for a standalone house close to town. This clearly means more scope to get a cheaper entry point.”

Mr Davidson also noted that while first home buyers and investors weren't in direct competition, conditions were challenging for investors, meaning there were fewer of them in the market than would otherwise be the case.

Another factor favouring first home buyers, Mr Davidson said, was that they were making full use of the low-deposit lending allowances at the banks. “Indeed, in August around 80% of the overall low-deposit allowance for owner-occupiers actually went exclusively to FHBs, or put another way, nearly 45% of FHB loans were done at low deposit.”

I love helping first home buyers

Mr Davidson said market conditions would remain positive for first home buyers for the foreseeable future, especially if mortgage rates continued to fall.

“Sure, it still won’t be easy for many FHBs (it never has been), and lower interest rates will also start to bring back some other buyers too. But there’s still a strong desire in New Zealand for people to purchase their own home, and it seems likely that FHBs will continue to find a way, provided that job losses don’t become too widespread,” he said.

I love helping first home buyers, so please get in touch if you're planning to enter the property market. I'll explain how the finance and buying process work, compare home loans for you and manage your mortgage application.