Experts say it's now easier for first-home buyers to enter the market due to the removal of the first home loan price cap and amendments to the CCCFA. Photo / NZME
Experts say it's now easier for first-home buyers to enter the market due to the removal of the first home loan price cap and amendments to the CCCFA. Photo / NZME
Whanganui's first-home buyers market has become more stable as restrictions ease and the market begins to slow.
Mortgage Science director Martin Cloete said the number of people buying their first home in Whanganui had gone up over the last few months, while the number of all other property buyers hadgone down.
He said this was because the Government removed the house price caps for Kāinga Ora First Home Loans in May.
The cap meant first-home buyers could purchase a property with a minimum 5 per cent deposit through Kāinga Ora, but only if the house was under $400,000.
Houses over $400,000 needed a 20 per cent deposit.
Now the cap has been lifted, first-home buyers can potentially purchase a property of any price with a minimum deposit of 5 per cent.
"It's good because even though it costs the first-home buyers a little bit more, equity will have grown to more than they could have saved if they didn't buy it."
Cloete said six months ago it was also really hard for people to get their finances accepted.
Amendments to the Credit Contracts and Consumer Finance Act (CCCFA) were made in December 2021 which forced lenders to put more emphasis on a borrower's expenses and ability to pay.
Cloete said there had been a slight relaxation of the rules as the CCCFA act had minor changes on June 1.
"People can now put forward a budget of what their spending will be after they buy the property as opposed to what their spending was before they buy the property, which is what the banks used previously.
"Banks still look at your bank statements and regular spending habits, but when they go through a broker we can help them put a budget together and work with the bank to show them what it will look like once they buy the property."
He said so far it was going well, and they had seen an increase in accepted finances for first-home buyers due to the changes.
"Generally, we advise people to try to get together a 20 per cent deposit because it's cheaper in the long run as they end up paying less interest.
"But to be fair most people don't have $100,000 to $150,000 sitting in their accounts to use for a deposit."
He said people who were really serious about buying a house were willing to make significant changes to their spending habits.
"They still need to be careful as the banks still look at spending habits to make sure people can afford the loans, but it's not as crucial now with the changes.
Banks now also scrutinised people's budgets of what their spending would look like after they purchased a property, as opposed to only what their previous spending looked like. Photo / NZME
"Banks are scrambling more for business, causing them to be more lenient to accept more first-home buyer applications they would have potentially rejected in the past," he said.
The REINZ monthly property report showed the median house price in Whanganui in June was $534,500, down from $550,000 in May.
In the Rangitīkei District, the median price last month was down to $400,000 (down 21.6 per cent) compared to May's median sale price of $510,000. Eleven houses were sold in June.
The average time it takes to sell a house in Whanganui at the moment is 54 days, 10 more than the average in June 2021.
Cloete said the high interest rates caused concern for some first-home buyers, but weren't stopping them.
"When you buy a house you're just wanting to secure the property, so they're willing to make it work as long as it fits within their budget."
He said investors had pretty much dropped out of the market because of the added restrictions from the Government.
Bayleys Whanganui and Ruapehu sales manager Michael Bourne said over the last couple of months it had been a balanced market, but this was changing.
"It's beginning to tip towards a buyers' market, and we're seeing a steady amount of first-home buyer activity," Bourne said.
"They're still an active part of the market and houses continue to be listed and sold every day. The market continues to move on."
Michael Bourne said Bayleys Whanganui and Ruapehu was seeing a steady amount of first-home buyer activity. Photo / Supplied
He said there was more time to analyse whether a property was right, whereas previously people had to leap in and make a decision rapidly.
"It puts first-home buyers in a stronger position with more potential for negotiation.
"It's certainly not all doom and gloom, it's just taking a little longer to sell houses."
