first home buyers

NZ Housing Market: Is there Hope for First Home Buyers? 

If you are a first home buyer in today’s real estate market, you may be feeling the squeeze. In the past year homes have been selling high above their rateable valuation. Lending rules have tightened. The required home deposits for a home purchase has increased. More homes are being sold at auction, and many more factors impact the buying ability of a first home buyer. But what do you need to know about purchasing your first home? Will there be a shift in the market anytime soon? Shopless investigates. 

What Factors are Impacting First Home Buyers? 

There are currently a number of factors that are impacting first home buyers, and their ability to purchase a home. Stricter lending criteria has meant that the spending habits of first home buyers and other borrowers have become more scrutinised. One article suggested that some borrowers have intentionally started to hide their spending habits in the form of prezzy cards or a parents bank account. Just to appear more appealing to and be approved by banks for a loan.  

Additionally, the national home average has risen even further to $1million. Reducing the pool of first home buyers capable of purchasing a home. And there has been an increase in required deposits for lending. All these factors heavily impact a first home buyer’s decision to look and buy a home. And impacts the areas that the first home buyers are looking to buy in. 

If a FHB meets all the requirements then why are they still hesitant? 

Due to the rapid turnover those starting out on the property ladder are more cautious with their purchase. They want to spend a longer amount of time looking and understanding the process. In the past year there has been a dramatic increase in homes sold at auction. Which is often off putting to first home buyers as it attracts cash-in-hand buyers, and puts more pressure on the potential bidders. 

Additionally due to a hot property market in 2021, less first home buyers were able to purchase a home within the period of their mortgage approval. Therefore many chose not to reapply for a mortgage approval based on being disenfranchised due to the lengthy process and hot market. 

What areas and type of home is the best package for a first home buyer? 

Typically those starting out on the housing ladder have been encouraged to buy the “worst house in the best street”. While others have opted for house and land packages, for some a tiny home has become appealing for some to reduce the cost for a period of time. There are also a number of suggestions of where the best places to buy for a first home buyer is. 

The NZ herald suggested for first home buyers in Auckland that South and West Auckland read popular areas to purchase. With Manurewa being the most popular area in Auckland for first home buyers. Stuff also did an article about the few suburbs in Auckland where you could purchase a home for less than 1 million, this included Auckland Central, Grafton and Ōtāhuhu. 

For areas outside of Auckland sources suggest areas such as Christchurch, Invercargill, Hamilton and the Kapiti Coast. 

Will the market shift?

There are definitely signs that the property market is slowing, or shifting. This may benefit first home buyers in 2022 that have previously been discouraged by the property market, but not all sources believe it will benefit first home buyers. The government is said to be focusing on how to get first home buyers interested in purchasing again. With tight lending criteria and higher mortgage rates, we hope to see a shift for those entering the property market. 

Shopless is an online marketplace where you can find your first home, or list your property. Make sure to check out our listings in the property section, here. And start your home search today.