House sales to first-home buyers represented a quarter of all property purchases in 2023, according to CoreLogic, making it a record-setting year for new homeowners.
The first-home buyer market share of buying activity rose to 25.8%, which was a record high — easily surpassing 2021's previous mark of 23.1%. Meanwhile, the recovery and rise of the property market is set to continue this year but "could be a little underwhelming".
According to CoreLogic property economist Kelvin Davidson, high mortgage rates and the prospect of caps on debt-to-income ratios later this year could dampen recovery.
The Reserve Bank began consulting on introducing the new debt-to-income restrictions on Tuesday, which could make it trickier for some to get a mortgage in the future.
Q+A's Whena Owen reports that overseas buyers are seeing the change in Government as an opportunity. (Source: 1News)
Additionally, the new government's push to restore interest deductibility for rental properties would also affect the market, with the first changes due in April.
"It will be interesting to see how investors' demand responds," Davidson said.
Looking back on the previous year, the economist said it had been the "first time first-home buyers have ever outbought other buyer groups".
Davidson said first-home buyers had been enjoying lower house prices, less competition from other buyer groups, and also some other supports, like KiwiSaver for deposits, and access to low-deposit finance via the loan-to-value speed limits.
Buyers had also been more willing to compromise on location and the type of home they wanted, he said. First-home buyers accounted for approximately 17,000 property purchases in 2023, up from 14,500 purchases in 2022.
Meanwhile, mortgaged multiple property owners and investors had a quiet year — with about 14,000 purchases or 21% of total buying activity, both the lowest on record going back to 2005.
Davidson said with loan-to-value ratio restrictions still biting, gross rental yields low, mortgage rates high, and interest deductibility rules in place, it's "not too surprising that investors' purchasing activity has softened".
"That said, their market share has just started to edge higher in the past month or two, so they're definitely a buyer group to watch as the market enters a new cycle."
The number of sales to homeowners moving properties, known as relocating owner-occupiers, had also been "relatively quiet compared to past standards, with just 25% of activity over the fourth quarter of 2023", according to CoreLogic.
Additionally, rental growth is still running at "historically high levels", and was 7% in the year to December, remaining "well above the long-term average growth rate of 3.2%, and reflects further growth in wages, as well as a tightening supply and demand balance".
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