The numbers of first homebuyers have dropped, scared off by rising prices and stagnant wages
Experts are divided on whether a drop in the number of people on the hunt for their first home is because young buyers have become disillusioned – or are just biding their time.
The financial comparison site Canstar has collated a number of surveys, polling a total of 18,000 people between February 2021 through to January 2022, to produce a Consumer Pulse report.
Overall, the data suggests the number of New Zealanders who are searching for their first house has decreased during that time.
“We might be seeing some fatigue and disillusionment with the whole idea of buying a first home.” – Jose George, Canstar
According to data collected between April 2021 and January 2022, the amount of 30 to 39 year olds who defined themselves as a prospective first home buyer slid from just under half to 35 percent, while the amount of 40 to 49 year olds who said they were in the same boat dropped from 38 percent to 25 percent.
The number of 18 to 29 year olds just dipped slightly.
The research found fewer people expect to rely on family support to get into their first home, from about 30 percent to 14 percent, but almost half of first home buyers were living with family to help save a deposit.
The perils facing first home buyers is nothing new, but Canstar general manager Jose George says rising house prices, inflation, and stagnant wages meant would-be buyers might not be feeling as optimistic anymore.
“We might be seeing some fatigue and disillusionment with the whole idea of buying a first home.”
Financial advisor and First Home Buyer Club director Dustin Lindale agrees that newbies to the market are tired.
He says they get excited about potentially buying a home, but this dream is quashed by rising prices and hampering policies such as the Credit Contract and Consumer Finance Act.
Newsroom has reported on how tweaks to the CCCFA are doing little to hand keys to first home buyers, and George doesn’t think rent increases and the general cost of living is helping either.
Buyers not disillusioned, just biding time
ANZ chief economist Sharon Zollner isn’t so sure would-be buyers are throwing in the towel because they’re disillusioned.
She says first home buyers might be choosing to bide their time, instead of rushing into buying whatever they can get their hands on.
“This idea that if you didn’t get in fast enough then you’d never get a house has gone, and has been replaced with a fear of paying too much and taking on too much debt, given what’s happening to mortgage rates," – Sharon Zollner, ANZ
“The whole vibe of the market has changed,” she says
“This idea that if you didn’t get in fast enough then you’d never get a house has gone, and has been replaced with a fear of paying too much and taking on too much debt, given what’s happening to mortgage rates.”
Higher mortgage rates mean people could borrow less based on a serviceability test, and the cost of servicing a given debt is now higher.
As outlaid in ANZ’s GDP forecast update released last week, the bank is forecasting a 10 percent fall in house prices in 2022. While house prices have dipped slightly already, Zollner says affordability hasn’t critically changed.
“There’s hope that things will get better, so why would you rush in now if you think house prices are going to fall? There’s no reason to jump in, boots and all, as fast as possible anymore.”
