Auckland first-home buyers lower sights
The number of first-home buyers continues to drop and in Auckland there are signs market entrants are lowering their sights to get on the property ladder.
Property data firm Core Logic has compared first-home buyer levels in June to August last year, before the Reserve Bank's limit on low-deposit mortgages began in October, with levels in December to February this year.
It found that nationally, first-home buyers had dropped 1.1 per cent and only four out of 22 areas surveyed had seen increases in new market entrants.
Those four areas were Upper Hutt (up 4.9 per cent), Palmerston North (up 2.9 per cent), apartment-dominated Auckland City (up 1 per cent) and Waimakariri (up 0.1 per cent).
Areas with the largest drops in first-home buyers included Hamilton (down 3.5 per cent), Rotorua (-5.1 per cent), Napier (-5.1 per cent), Queenstown (-5.3 per cent) and Tauranga (-4.1 per cent) which are not traditionally first-home buyer markets.
Wellington City, which had one of the largest drops in first-home buyers last month at -5.4 per cent, saw a further 2.1 per cent drop in market entrants during the survey period.
The report also looked more closely at Auckland, to see if buyers were prepared to buy cheaper homes as a result of the loan-to-value ratio (LVR) limits.
For Auckland City, where first-home buyers increased, sales to entrants fell in the $400,000 and $500,000 bracket but grew in the under-$400,000 category.
Properties valued at more than $700,000 became less popular or attainable for most first-home buyers but there was increased interest within the $500,000-$600,000 value range, "suggesting those high-end first-home buyers have also adjusted their value expectations down".
Core Logic said there was "no simple answer" at this stage but the data suggested that some first-home buyers were lowering their expectations.
It also investigated whether home values were rising in suburbs where first-home buyers were flocking, but found the link was tenuous.
House values rose in New Lynn (19.6 per cent), Weymouth (16.6 per cent), Chatswood (14.9 per cent) and Cockle Bay (9.2 per cent), which all saw significant increases in first-home buyers.
But Onehunga (up in value by 9.2 per cent), Halfmoon Bay (9.7 per cent), Flat Bush (11.3 per cent) and Glendene (17.6 per cent) had significant decreases in first-home buyers.
"These buyers tend to make an emotion-driven decision, whilst investors, who are mostly benefiting from first-home buyers dropping out of certain markets, are more inclined to hunt for bargains," it said.