{"id":33938,"date":"2021-08-16T15:56:37","date_gmt":"2021-08-16T03:56:37","guid":{"rendered":"https:\/\/propertynoise.co.nz\/au\/?p=33938"},"modified":"2024-03-01T20:45:03","modified_gmt":"2024-03-01T07:45:03","slug":"first-home-buyers-in-nz-will-suffer-from-the-reserve-banks-surprise-decision","status":"publish","type":"post","link":"https:\/\/propertynoise.co.nz\/au\/first-home-buyers-in-nz-will-suffer-from-the-reserve-banks-surprise-decision\/","title":{"rendered":"First home buyers in NZ will suffer from the Reserve Bank\u2019s surprise decision"},"content":{"rendered":"

PHOTO: Auckland, New Zealand<\/strong><\/p>\n

The Reserve Bank of New Zealand\u2019s decision to reduce the number of owner-occupiers that can get a mortgage with less than a 20 per cent deposit is set to have huge impacts on first home buyers, according to\u00a0CoreLogic NZ<\/a>.<\/h3>\n

The Reserve Bank of New Zealand (RBNZ) has reduced the share of owner-occupiers who can take advantage of the scheme from 20 per cent to just 10 per cent. CoreLogic NZ has suggested this will have a significant impact on first home buyers.<\/p>\n

Amid the broader surge in property values, first home buyers were already often trying to find additional funds to purchase a spot on the property ladder. In June 2021, buyer paid about $150,000 more than the same time last year.<\/p>\n

In turn, the overall rise also meant an ever-increasing deposit hurdle, which some have been getting past by entering with less than the standard figure of 20 per cent.<\/p>\n

More than than three-quarters of all owner-occupier lending done outside the 20 per cent deposit speed limit went to first home buyers in June, a figure that has steadily risen over time.<\/p>\n

Put another way, 38 per cent of all first home buyer lending in June was done with less than a 20 per cent deposit. This exemption or speed limit has been a key support for first home buyer demand in the property market.<\/p>\n

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Source:\u00a0CoreLogic NZ<\/a><\/figcaption><\/figure>\n<\/div>\n

But last week, the RBNZ announced their intention to reduce the cap for low-deposit owner-occupier mortgages from 20 per cent of lending flows to just 10 per cent.<\/p>\n

The RBNZ has recommended the change start from 1 October, but CoreLogic has warned that banks may move earlier than that.<\/p>\n

CoreLogic estimated that potential home buyers will have to find an additional $50,000 in Christchurch, $81,000 in Wellington or $90,000, according to average house prices.<\/p>\n

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Source:\u00a0CoreLogic NZ<\/a><\/figcaption><\/figure>\n<\/div>\n

The publication also identified which areas have a larger first home buyer market share so far in 2021. Kawerau was used as an example with 12 percentage-points above average (34 per cent so far in 2021 versus average of 22 per cent).<\/p>\n

Put another way, these first home buyer \u2018hotspots\u2019 might feel the pinch a bit more than others.<\/p>\n

CoreLogic indicated first home buyers may have to compromise on property type or location to get their foot on the ladder.<\/p>\n

But the ability to purchase a property with a lower deposit than other buyers has clearly been a significant support for FHBs in recent times. CoreLogic indicated this may funnel even more demand towards new-builds.<\/p>\n

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CoreLogic NZ<\/a><\/p>\n<\/figcaption><\/figure>\n<\/div>\n

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