What first home buyers are paying in Tauranga: CoreLogic

CoreLogic's biannual First Home Buyer report, released last week, revealed how much new buyers are paying. Photo / Getty Images

Tauranga first home buyers are paying a median of $800,000 to get onto the property ladder, new data shows.

Property experts say higher prices for property in the city meant Tauranga was not an active market for first home buyers who were finding it tricky to save up a deposit and service a mortgage.

But they were noticing more new buyers coming through despite continued affordability pressures, tight lending rules, and higher mortgage rates and prices.

CoreLogic's biannual First Home Buyer report, released last week, showed 3750 first-time purchases in New Zealand were made in the three months to September. It was the lowest figure for that quarter of the year since 2011.

In Tauranga, 118 first home buyer purchases were completed during the same period. That was slightly more than 115 in the previous quarter but down on the long term average of 215.

First home buyers in Tauranga paid a median of just above $800,000 in Q3.

Real Estate Institute of New Zealand data released on Tuesday showed Tauranga's median house price dropped $55,000 in the last month to $900,000. Rotorua's dropped 0.1 per cent to $659,500.

CoreLogic's head of research Nick Goodall. Photo / Supplied

CoreLogic's head of research Nick Goodall said first home buyer purchases made up 15 per cent of sales in Q3 in Tauranga, which showed it was not an active market for people seeking a foot on the property ladder compared to nationwide figures.

"This is also low for the area ... no doubt the higher average price in Tauranga plays a part here, making it harder for first home buyers to both save for the required deposit and service a mortgage at current rates."

CoreLogic's chief property economist Kelvin Davidson said continued affordability pressures, tight lending rules, and higher mortgage rates were a factor.

However, there was a flicker of confidence re-emerging among first home buyers even in a testing credit environment, he said.

"We suspect some of these recent buyers had previously held back as prices fell, but have now started to see value again – maybe even some genuine 'bargains' – and are prepared to make a purchase even if house prices haven't fully found the floor just yet."

But Davidson said that with inflation, an expected rise of the official cash rate (OCR), and home loan interest rates rising again, typical mortgage rates were likely to climb and would be a "stern test" for many would-be first home buyers.

Managing director of the Realty Group Ltd, which operates Eves and Bayleys, Heath Young. Photo / Supplied

Managing director of the Realty Group, which operates Eves and Bayleys, Heath Young said sales volumes were down compared to long-term averages across all buyer categories.

"The higher interest rates and credit criteria are certainly having an impact on first home buyers, however, from a positive perspective, buyers are seeing more favourable prices than a year ago, have longer to make decisions, and certainly have more properties to choose from."

Young said first home buyer activity in Tauranga and Rotorua in the last few months was "solid" with some good deals being achieved as the market re-rated.

"Activity has certainly picked up through July–September when compared to the period April to June."

REINZ regional director Neville Falconer. Photo / Supplied

REINZ regional director Neville Falconer said first home buyers and owner-occupiers were active in Tauranga and Rotorua.

"Rotorua salespeople also reported adequate interest from developers beginning to filter through.

"In Tauranga, salespeople say there are opportunities for first home buyers not available previously, and when finance is confirmed, they are acting on it."

Falconer said there was also an increase in higher end stock coming to the market but, again, lower buyer demand.

"Across the Bay of Plenty, newly listed properties with quality marketing campaigns attracted higher than average open home attendance this month."

Owning a home is 'best feeling in the world'

Abeera Dhaliwal worked two jobs, went without discretionary shopping, concerts, and parties with friends for 10 years to save $35,000 towards her first home.

Now the 27-year-old says it is the "best feeling in the world" to have a house of her own.

Dhaliwal said that while it was hard saving money for a deposit on a first home, it was not impossible. The house is a three-bedroom newly-furnished property in Rotorua's Western Heights.

"I wanted to get into the market and as soon as I got an opportunity I took it."

Dhaliwal said she saved money by working both a full-time and part-time job.

She also compromised by not going to concerts and parties with her friends and avoiding unnecessary shopping, she said.

Abeera Dhaliwal, 27, has bought her first home. She is pictured with salesperson Chander Sandhu. Photo / Supplied

"But hey, look at me now.

"I agree it's hard to save money but it's not impossible. The earlier you start the better off you will be."

Dhaliwal said she was not sure how she would celebrate once she got the keys.

"I'm a little nervous and excited at the same time," she said.

"It's the best feeling in the world to have a house of your own.

"You can decorate it the way you want and I don't have to stress about my future as I know I've got a roof over my head. Which opens me up to take more opportunities and risks."

Her advice to other people thinking of buying their first home was to "manage your money, do your research, inspect the property, get a good lawyer and get going".

"The time is now."

For Dhaliwal, buying her first home was also about female empowerment.

The vendor, who would only be known as Mahia, was 26 when she bought the house as her first home in 2018. Now, Dhaliwal has bought it as her first home at age 27.

"Every woman's success should be an inspiration to another," Mahia said.

She accepted Dhaliwal's offer as the pair shared similar journeys on to the property ladder, she said.

“There is no other feeling quite like purchasing your first home.”