First-home buyers (FHBs) are more active outside big cities, according to the latest research from property analytics firm CoreLogic.
CoreLogic New Zealand senior research analyst Kelvin Davidson says FHBs currently account for a record share of property purchases in 15 of the country’s 66 districts.
“These are mostly rural areas, with FHB demand surely underpinned by good job options in primary industries,” he stated.
The study shows that FHB shares were high in absolute terms in the smaller areas across the first four months of 2018, with eight of the top 10 having an FHB share of 26% or more – meanwhile, the national average is 23%. In Hutt and Porirua, 36% of all purchases were made by FHBs. The farming districts of South Waikato and Ashburton recorded 33% and 31% respectively.
In the last five years, transactions in South Waikato were only 20% and 21% in Ashburton – suggesting a high increase in FHB shares. Porirua has also seen a sharp 9% rise in its share over the same period. South Waikato and Ashburton also saw significant growth, recording an FHB share 12% higher than its long-term average, and Clutha District saw a share of 25%, a figure significantly higher than its average 16%.
“Nationally, influences such as access to KiwiSaver funds and a willingness to compromise on quality and/or location have enabled FHBs to continue to purchase a home,” Davidson explains. “In these provincial centres, an added bonus is that property prices themselves are lower, in absolute terms and relative to incomes.”
The average price paid by an FHB in the first four months of the year for an Ashburton property sits at $324,000, 3.6 times the average household income in the district. Nationally, the average price paid by an FHB is around $545,000, or 5.6 times the household income.
Smaller centres at the bottom of the FHB ranking include Western Bay of Plenty (13% in early 2018), Taupo (13%), Central Otago (11%), Far North (10%), and Thames Coromandel (6%).
“A common thread for many of these areas is that they are often considered tourist and/or (politely) retirement locations, where a typical FHB may not be able to get a suitable job or may not want to live because of reduced proximity to services or events,” says Davidson.
“In summing up, it’s not surprising that FHBs are finding it easier to enter the property market in the smaller regional cities and towns, where houses are more affordable.”
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