First home buyers’ share of the property market has reached a record high but it remains to be seen if the momentum can be sustained.
A new report from property research firm CoreLogic shows first home buyers represented 26.4 percent of the property market in the three months ended September, up from 21.5 percent in the prior quarter.
The long-term average is 21.8 percent and the previous benchmark, set in the third quarter of 2020, was 25.6 percent.
During the same three-month period, the average house price in New Zealand rose nearly 5 percent to $950,229.
CoreLogic chief property economist Kelvin Davidson said extra care was needed when interpreting the figures because the number of transactions completed over the quarter had been disrupted by the reimposition of lockdown restrictions, resulting in a smaller sample size.
“However, it’s safe to say FHBs are very active in the market,” he said. “[First home buyers] were taking the opportunity to get into the market, capitalising on strong financial incentives to buy rather than rent, filling the gap left by a decline in mortgaged investors’ market share who faced tougher conditions due to tighter lending restrictions.”
The share of purchases they made had been unexpectedly strong, given that house prices had surged by more than 27 percent in the past 12 months, he said.
New purchasers were increasingly drawing on their KiwiSaver and “the bank of mum and dad” to put together a deposit, Davidson said, and were also making compromises on property type and location to get into the market.
The data from CoreLogic showed the average median price paid by first home buyers was $660,000, down from $685,000 in the prior quarter – when freestanding houses made up a larger share of purchases. The median price paid a year ago was $565,000.
Freestanding properties accounted for 72 percent of all new buyer purchases in the third quarter, down from 78 percent a year ago. The proportion of flats, defined as townhouses and shared wall properties, rose to 18 percent, compared with 14 percent in 2020.