First-home buyers undeterred by high house prices, homeowners stay put
Wednesday, 23 January 2019
2018 was the year to buy a first home for many New Zealanders.
New data from Corelogic shows first-time buyers are an increasingly large proportion of the property market's transactions, and even the country's highest prices aren't enough to put them off.
They made up 23 per cent of all New Zealand residential property purchases in the last quarter of 2018, from 22 per cent in 2017.
Even in Auckland, with an average price of more than $1 million and a median of $850,000, first-time buyers were 26 per cent of the market, the biggest share since 2008.
Christchurch and Wellington were also prime first-home areas.
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Analyst Kelvin Davidson said access to KiwiSaver for a deposit was an important support for those buyers.
But that same data showed that those who already own a house are increasingly opting to stay put.
In the final quarter of 2018, the share of purchases going to 'movers', or people who own a home and are moving to another, dropped to 26 per cent from 28 per cent a year earlier.
Davidson said existing homeowners were probably opting not to move for several reasons.
'High costs to move, other properties they like might have risen out of their price range, probably some have already tapped out on their debt levels, and … uncertainty around where the market is headed probably helps people to stay put. Most people have jobs, so if you already own a house and don't 'need' to move, why would you – that seems to be the attitude.'
By contrast, investors increased their share to 24 per cent from 23 per cent a year earlier, the highest since mid-2017.
He said it seemed investors would continue to be active this year.
'There's certainly not much I've seen to suggest that existing players are going to sell out – so that's reassuring. It's fair to suggest that extra government measures such as the tax ring-fence for property losses and looming prospect of some sort of capital gains tax will deter some new investors, or at least make them think twice, but again I wouldn't envisage a huge change in behaviour – after all, property is still a trusted asset class and alternative options such as term deposits aren't especially attractive at present.'