Watching the trend of the return of first time buyers

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Watching the trend of the return of first time buyers

A recent report has revealed that first time buyer activity accounts for 23% of home as,e, the highest it has been since 2007. This may seem small, but it’s big news and could be the start of a welcomed change to the market. In the blog we have a dig deeper into why this is happening.

Stable house prices

Flat housing prices was the first factor indicated, although there are monthly fluctuations up and down in Auckland, these have mostly been modest – meaning the market prices are fairly stable and consistent. This may seem like a bad thing, with a lot of central Auckland’s prices being quite high, but where first time buyers are looking, in more southern and western suburbs, these affordable houses and remaining just that – affordable.

Rodney, Manukau, and Papakura have seen as slight increase in property values, which can be attributed once again to first home buyers, who are currently trending around 25% and willing to look further afield south and west when purchasing. This is a direct result of first time buyers purchasing houses from this market as they are generally lower priced, which has resulted in growth in these markets. It seems that first time buyers aren’t worried about buying in the more expensive markets, and are willing to travel, and with the city continuing to expand further south and west, we could see this trend develop more in new development areas as well.

Record low mortgage rates and housing affordability

With record low OCR rates and banks fighting to win over potential new clients, we are seeing record low mortgage rates that haven’t been seen in decades.  these mortgage rates were already reaching record lows at the tail end of last year, but even in the recent months they have continued to reach new record lows, responding to the lowering of the Official Cash Rate.

A new report has also factored in recent data showing that incomes are rising, which has lead to a  significant improvement in housing affordability for typical first home buyers in Auckland. The Home Loan Affordability reports track the combined after-tax pay for typical first home buyers (a couple where both are aged 25-29 and working full time) and in April this was estimated to be $1666.08 in Auckland, which was up $33.04 a week (+2%) compared to April 2018 and up $68.96 (+4.3%) compared to April 2017. This, along with the other previous factors, means that it is more affordable to repay mortgages, and some are choosing to take advantage of these factors and pay slightly more.

How long these benefits remain concrete, and if things will continue on this trend will remain to be seen. But it is most definitely welcomed news for first time buyers who are taking up a higher percentage of the market, and those benefiting from those sales.

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Ravi Mehta