If nothing else, I want this column to end up in front of one of New Zealand’s most unlucky and most overlooked or ignored groups: our first home buyers. I want them to feel a little more hopeful than they might have in the past 10-20 years.
To take the first steps on to the property ladder at any stage during this time has meant unbelievable sacrifice, hard work, the bank of mum and dad, maybe a Lotto victory or some incredible luck. It might mean all of the above.
Right now, however, first home buyers appear to be doing better: a CoreLogic report finds 26% of house sales in the first quarter of this year went to first home buyers, against a historical average of 21%. In March, according to the Reserve Bank, 2447 mortgages were approved for first home buyers, up 7.7% on a year ago (though still well below the peak of 3338 approvals in December 2020).
Recently, I went to an auction where six houses were up for sale. The first one sold for a record $3 million after its owners were told to expect $2.5m max. That might have looked like things were off to a flying start, but the other five houses were passed in. Why? No buyers.
Mum and dad investors, and even some of the bigger high rollers and developers stayed home. They are gun shy - they need more certainty and aren’t desperate to trade when money is expensive, and returns are harder to come by. They don’t need to be in too deep so have chosen to stay away.
In his most recent survey of real estate agents, economist Tony Alexander says they have witnessed a big increase in first home buyers being successful because the pressure to compete against others has disappeared - for now.
The number of first home buyers getting into a home of their own is steadily increasing while the average price they are paying is slowly declining. The utter despair and abandoning of hope of getting into the market has now been replaced with some genuine light at the end of an exhaustingly long tunnel.
First home buyers are being cautious about the price they pay. According to CoreLogic, the average price paid by a first home buyer in the first quarter was $695,000, down from $715,500 in 2022. That’s despite standalone houses (bigger properties) representing a higher share of purchases.
More homes are being listed, too: the number of properties on the market has risen 23% in nine months to sit at a nine-year high of 30,400 units, says CoreLogic.
With more choice and less competition comes the opportunity for first home buyers to walk away if they feel the price is even a tad over what they’re prepared to pay. Previously, they might have tried to rustle up a bit of extra cash and put themselves under further pressure.
However, it’s not a runaway buyers’ market: Tony Alexander says worries about job security and the shrinking job market are deterring the young. He also warns of a big slump in building consents.
But if your income is secure and the housing market is slowing, it means genuine opportunity for those who have previously faced hurdles in entering the market. It’s a small window but it’s here, so use it. It’s time, your time.
You’ll want to find yourself a good real estate agent, one who’s honest. They’re the ones who would have been saying for the past 12 months or so that, to be honest, the housing market’s been looking a little flat, which mirrors the state of the economy.
I despise those real estate vultures who have fed the fear of “missing out”, which has seen buyers pay over and above what anything was worth during the Covid peak, and undoubtedly pushed up prices. They’ve contributed to making housing unattainable for a whole group of Kiwis.
Housing is a long, slow machine in New Zealand. What takes six months to build in Australia takes 600 days here, so past promises of cheaper houses and pledges to build entry level homes are only starting to come to fruition now. Even bank lending and mortgage rate increases take time to have a full effect on slowing the market.
So, now is the time that the government should be bringing all agencies together to ensure future homeowners aren’t again shut out from the housing market in their own country because of hype, greed, and industry players – the agents, the developers – dining out on massive windfalls.
Obviously, it’s no good for harmony and general wellbeing if future generations can’t afford a roof over their heads. So, those who are battling to get one shouldn’t be ignored and neglected, as they have been in recent years. Going on two decades, this ambitious and hard-working group were effectively locked out of the housing market. The door has been pushed ajar – but not because this government or the last one had a plan.
All this has been achieved by the vicious cycle of tightening by the Reserve Bank. It’s the net result of doing little, of not being wealthy enough as a nation and always relying on debt. Let it be our lesson and never let it happen like this again.
Alarming inaction taxes people forever and robs them of their future. For those who make it to Parliament in the years ahead, find solutions and make them happen. Housing isn’t a “nice to have”, but a bare essential.
