First-home buyers have hit a record-high share of the residential property market, accounting for about 28 percent of September's purchases, new data has found.
CoreLogic's chief economist Kelvin Davidson said this was due to lower house prices, less competition from speculators or investors, plus low deposit allowances.
"However, that may take a slight turn following government changes,” Davidson said.
In CoreLogic's latest monthly property data out on Thursday, Davidson said first home buyers are "dominating" the market in most cities.
In Tāmaki Makaurau Auckland and Ōtautahi Christchurch they made up 29 percent of purchases.
Independent Economist Tony Alexander's October survey also showed first home buyers remain "strongly interested in purchasing a property".
His survey showed a net 59 percent of respondents said they're getting more inquiries from first-home buyers.
"This tells us that the extent to which young buyers are driving the upturn in the housing market is not easing and if anything may be strengthening."
BUYER ACTIVITY
Owner-occupiers moving house (26 percent of purchases) and mortgaged multiple-property owners (21 percent of purchases) have been "relatively quiet compared to normal" in the third quarter, Davidson said.
Activity among those two groups could pick up following the National Party's election to Government last week, he said.
"But we’re not convinced it will radically transform the subdued recovery that has commenced,” Davidson said.
However, Alexander said investor inquiries "are at their highest levels since late 2020", and borrowers are mostly opting for 18-month and 24-month fixed terms.
"Seasonal patterns of activity for now have been disturbed by the general election," he added.
National campaigned on reinstating tax breaks for property investors, but they're not likely to flood the market again, Davidson argued.
"They are still restrained by 35 percent required deposits, along with low rental yields and high mortgage rates,” he said.
"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."
Residential property sales have increase for five months in a row, up 8 percent since last September.
LISTINGS
Total property listings are now at 31,200 - about 15 percent down on a year ago.
“We’re still seeing low flows of new listings each week which combined with rising sales volumes, are seeing stock of listings on the market drop,” he said.
A drop in total listings could lead to more buyers crowding the market.
New listings have also dropped since a year ago, with 7316 homes put up for sale in the four weeks to October 8.
Again, that's down 15 percent from the same time last year but Davidson said they were still rising during spring.
PROPERTY VALUES
Average property values have hit the bottom of the market nationally in September, according to Davidson, after falling for 18 months.
Falls in some areas were offset by gains in others.
All residential properties in Aotearoa now total $1.58 trillion, compared to Australia's $10 trillion.
Three weeks ago, ANZ bank said the nationwide median house price could rise to $812,000 by the end of the year, up from September's $780,000.
The strong labour market, record-high net migration, and changing demographics could put upward pressure on prices.
Some retail banks predict Te Pūtea Matua / Reserve Bank will keep interest rates higher for longer, which Davidson said is "a significant challenge".
RENTS & MORTGAGES
Average weekly rents were up 7 percent in September compared to a year ago, reflecting "higher wages, but also a tightening supply and demand balance, as migration soars in NZ," said Davidson.
The gross yield for rental properties has increased to 3.2 percent, up from 2.6 percent during most of 2022.
When it comes to mortgages, about 54 percent of current home loans (by value) are due to roll over onto higher rates over the next 12 months.
Davidson said inflation had passed its peak, and the full effects of the rising Official Cash Rate (OCR) are yet to make their way through the economy.
"Mortgage rates are close to, or already at, their peak."
