Home buyers should see less competition at auctions during the next few months — providing a small window of opportunity for those looking for their first property.
According to Nick Goodall, a senior research analyst at property data firm CoreLogic, first time buyers have a few things in their favour right now; access to KiwiSaver funds for home purchases, low interest rates and property speculators looking outside Auckland for residential property — reducing competition.
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“First home buyers have been the group to benefit the most from the pull-back of multiple property owners in Auckland,” he says. “It is likely they [first home buyers] were the ones previously missing out and are now taking advantage of the less competitive market.”
Data from the firm shows that in March 2014 first home buyers accounted for 19 per cent of all house purchases in the Super City. But following government and Reserve Bank intervention, this rose to 23 per cent by the final quarter of last year.
However, buyers need to move fast as Goodall expects foreign speculators to be back in the Auckland market soon — having cut through government red tape to get the compulsory IRD number. He also says house values will continue to rise “off the back of limited supply”.
However, the overall picture is still pretty gloomy when it comes to home affordability in Auckland. According to a report released in December by Massey University, Auckland residential real estate is 59 per cent less affordable than in the rest of the country.
Housing affordability is determined by comparing average weekly wages with regional median homes prices and the mortgage interest rate.
A total of $1.6 billion of building work was consented in November — the first time residential building consents have passed the billion dollar mark.
Figures from Statistics New Zealand show the work includes $1.1 billion of residential property, and $531 million of non-residential work. The number of new dwellings consented during November also reached a 10-year high.
The government department says November is usually a big month for residential building consents, and 2015 was no exception — consents were up 17 percent from the year before, driven by increases for houses and retirement villages to meet demand from retiring baby boomers.
In all, 2831 new dwellings were consented, the most in a month since March 2005, when 3027 new dwellings were rubber stamped.
Regions with the most consents are Auckland (966), Canterbury (573) and Wellington (328) – the highest monthly number in the capital since April 2008.
In seasonally adjusted terms, the national number of new dwellings consented rose 1.8 percent in November, when compared with October. The long-term trend shows a 0.6 percent increase — the highest level since July 2004.
Auckland still king
Economists at Westpac say Auckland is still the residential growth story, and that Canterbury may experience a small rebound following sharp falls in activity in the last few months. They are also predicting “robust residential consent activity in Tauranga and Hamilton”.
There’s plenty of evidence the Auckland market has slowed since October, mainly as a result of tax rules and RBNZ’s lending restrictions. However, Westpac doesn’t expect the Auckland market to continue to slow as sharply going forward. But they concede we won’t be able to tell for sure until figures for December are released by the Real Estate Institute.
And with Auckland making up the vast majority of national turnover in the housing market, the slowdown is weighing on the nationwide figures — masking what appears to be a pretty healthy picture in the regions. Places such as Hamilton and Tauranga — two locations that have become the focus for property investors — are seeing plenty of activity.