First home buyers taking their chances in property market

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Photo: RNZ / Angus Dreaver

First home buyers are leading a rebound in the housing market – accounting for a record 28 percent share of market purchases.

CoreLogic NZ’s Monthly Housing Chart Pack for September indicates residential sales numbers rose for five consecutive months, with September’s figure up 8 percent on last year.

First home buyers dominated the market in most of the main centres, with lower prices and less competition from other buyer groups.

However, chief property economist Kelvin Davidson said the make-up of the market might change following the election result.

“Investors will be feeling more encouraged, but don’t seem likely to flood the market because even though tax bills might get smaller, they are still restrained by 35 percent required deposits, along with low rental yields and high mortgage rates,” he said.

Gross national rental yields nationally edged back up to 3.2 percent last month, which was the highest level since 2020, after remaining around 2.6 percent for most of 2022.

“Therefore, they’ll still be required to ‘top up’ the cashflow on their property purchases out of other jobs or sources of income.”

Davidson said national average property values appear to have found the bottom of the market, following 18 months of falls, as the number of listings begins to pick up again.

“We’re still seeing low flows of new listings each week which combined with rising sales volumes, are seeing the stock of listings on the market drop,” he said.

“This means buyers who have secured their finances may start to see more competition.

“The increased confidence to buy when prices stop falling could bring out a bit of demand too, as no one wants to buy a house and find out they could have got it cheaper later.”

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