The number of first home buyers getting into a home of their own is on the rise. But the average price they're paying, and the amount they're borrowing, are declining.
Interest.co.nz estimates the average price paid by first home buyers was $656,019 in May this year, compared to the market peak of $717,724 in April 2022.
That means on average first home buyers were paying $61,705 less to get into their own home in May this year than at the top of the market just over two years ago.
There has also been a corresponding decrease in the average amount they're borrowing over that time.
According to Reserve Bank lending figures, the average size of mortgages approved for first home buyers when their prices peaked in April 2022 was $592,299. By May this year that had dropped to $548,148, reducing the average size of their mortgage by $44,151 (-7.5%).
Over the same period, the number of mortgages approved for first home buyers has jumped from 1766 in April 2022 to 2700 in May this year.
However, there has also been a jump in the number of first home buyers purchasing their first home with less than a 20% deposit.
At the market peak in April 2022, just 412 (23.3%) of the mortgages approved to first home buyers were higher risk, low equity loans.
In May 2024 that number had more than doubled to 909 (33.7%).
So the number of first home buyers with less than a 20% deposit has risen from roughly a quarter to a third over the last two and a bit years.
So to summarise, over the 25 months to May this year, more prospective first home buyers were getting into their home, and on average they paid significantly less to do so and were also borrowing less.
But more of them, both in terms of their absolute numbers and the percentage of buyers, were buying with less than a 20% deposit and were taking out higher risk, low equity mortgages to seal the deal.
29 Comments
No he did not.
By all intents, the Nats were going to save the Rapacious Landlording class from losing their gold chalices and top 10% social class.......
Now the landlords are being chucked to ravages of the housing crash wolves and their riches are no longer the mega-minting presses they believed would be and enabling riches forever forward.
Oh well, a much better NZ WILL EMERGE, FROM THIS EPIC HOUSING MARKET CRASH.
How should people in their 20s/30s think about buying a home?
https://www.youtube.com/watch?v=b9g9LBMRVHc
All FHBs should watch this 3 mins of wisdom from Prof Galloway & Morgan Housel
It would certainly help them avoid rookie mistakes
But let's acknowledge that many posters on here have never seen a real bear market, in anything. They haven't experienced how terrifying it is when a market gaps; when there are no buyers for what you have to sell, at any price. It's only then, they realise that no wise saying from the past helps in the slightest.
Some people have to. They have no choice. And when that happens, it affects the price of all other properties around them. Example: A new-build property in a number of similar properties is defaulted on by just one contracted buyer. The developer assumes the property back, and sticks it on the market to clear it from his books at 20% less than the original contract price; keeps the deposit, in other words. Those other buyers have to go to their bank to get finance. Guess what price the banks use to assess the lending? And that's when it snowballs, and some can't hang on.
A very large proportion of New Zealanders have never seen a proper bear market. And I would say more than 90% of people never thought there would be one, whether they are spruikers or not. And of course all the vested interests, economists, media and spruikers have continuously pushed the narrative that there could never be a true bear market in NZ property.
The time to buy is when you can afford it.
Rookie investor living up to their name. If they could have afforded it in 2021 would that have been the time to buy. I suppose if you don't mind overpaying by at least 30% then that is all good.
It's funny though, I've never heard a successful investor say buy when you can afford and lock in 30% loss. Rookie must be onto another secret winning investment formula.
Assuming a 10% deposit means you need to assume a higher interest rate and servicing costs than a standard 20%, so your DTI of 5:1 doesn't translate to the same affordability you would typically expect.
Deposit 20% with DTI of 5:1 has lower interest rate than deposit 10% with DTI of 5:1.
Yes great news for the current and aspiring FHBs.
The better news, is the much longer they wait, the much, much cheaper it will get.
Good on minister Bishop for pursuing cheaper land and building costs!
What a Rockstar!!
Cheaper housing prices and lots more housing options will give the NZ economy real growth into much more productive business into the future.
The Rapacious rentier class won't like it, tough tities.
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