First home buyers ‘marginally’ ahead in softening market


Despite interest rate rises, an report suggests it’s arguably easier not harder for first-home buyers to crack into the housing market for now, says Century 21 Owner Tim Kearins

Based on the latest REINZ data, the latest Home Loan Affordability Report saw the overall median sales price for lower quartile properties decline from $640,000 in April to $628,000 in May.

This means a reduction in the required deposit and a reduction in the amount needed to be borrowed and repaid. While this month-to-month movement is not dramatic, it will nonetheless help.

When also factoring in the effects of rising interest rates from April to May, the Home Loan Affordability Report concluded first-home buyers were still ahead overall, albeit it marginally.

House prices are certainly softening. At the same time the Reserve Bank has indicated that interest rates will continue to rise for the foreseeable future.

Locking in a good interest rate can be more important than a lower house price when it comes to buyers’ ability to service debt. That’s why many first-home buyers are taking the plunge now.

More tenants are reaching for mortgage calculators and meeting with brokers to assess their chances of securing a loan. This follows TradeMe’s latest rental price index showing the national median weekly rent edging closer to $600 – with rents up seven percent on a year ago.

Also helping first-home buyers’ motivation and chances is the fact that they now have greater access to government help, making it slightly easier to cobble together a deposit.

Budget 2022 saw assistance for thousands more first-home buyers. House price caps for the First Home Grant were increased and the First Home Loan scheme saw price caps entirely removed.

Additional help will hopefully come with the proposed changes to the Credit Contract & Consumer Finance Act (CCCFA) which take effect on 7 July. This follows a major credit crunch since late last year with the CCCFA requiring banks to apply ultra-conservative assessments on new mortgage applications.

The hoops and hurdles for first-home buyers have been many. However, with prices for entry-level homes softening, government support widening, and stringent lending requirements lessening, homeownership for now is in reach of more buyers.