Soaring house prices in New Zealand did not discourage first-home buyers (FHBs) from entering the property market – and some of them don’t even start at the bottom of the property ladder, according to CoreLogic.
The latest CoreLogic NZ First Home Buyer Report revealed that the median price paid by FHBs around each of the main centres and the next 12 biggest “main urban areas” in 2020 was consistently above the lower quartile price paid by full buyers. On a national basis, the median price paid by FHBs was $565,000 compared with the lower quartile figure of $430,000 across all buyers.
“The share of purchases being made by FHBs is currently running at its highest level since our series began back in 2005. In other words, although investors are pretty active in the market at present, many FHBs are finding a way in. FHBs have also been tapping into their KiwiSaver funds, with more than 44,300 withdrawals for first home purchases in the year to March 2020, up from about 39,600 the previous year,” said Kelvin Davidson, a senior property economist at CoreLogic.
“We have identified that in some cities, paying a mortgage is now cheaper than paying rent, and, nationally, an FHB is only paying a little more, around $47 a fortnight, to cover a mortgage compared with the cost of renting.”
Davidson said FHBs’ purchases have also risen in recent years, with their market share rising because they have become a key driver of demand and activity in the property market. Nationally, FHBs’ market share in 2020 was 24% (25% in Q3), well above the average of 21% and surpassing the previous peaks of 23% from 2006 to 2007.
“In terms of prices paid, the median of $565,000 paid by FHBs to date in 2020 is $54,000 less than the median price paid across all buyers – $619,000. But the fact that this is significantly higher than the lower quartile price paid across all buyers, $430,000, is interesting to see. It tells us that the ‘average’ FHB isn’t always buying in the lower tiers of the market and undermines the popular perception that FHBs generally enter at the bottom and work their way up,” Davidson said.