First Home Buyers Paying Less for Homes as Low Equity Lending Increases

Date Published: 29 February 2024

Key Facts

• The average amount paid by first home buyers in New Zealand for a house in January 2024 was $656,557, a decrease by $16,784 or 2.5% since December 2023.
• January 2024’s average price is the lowest since February 2023.
• The peak estimated average price paid by first home buyers was $718,000 in April 2022.
• The average price paid by first home owners in January 2024 was 116% of the Real Estate Institute of New Zealand’s lower quartile selling price for the same month, indicating they remain grouped at the lower end of the market.
• 31% of mortgages approved for first home buyers in January were low equity loans, a significant increase from 16% in March 2022; usually corresponding to Reserve Bank rules.
• Average amount borrowed by first home buyers in January 2024 was $547,000, a slight increase from $549,000 in January 2023.
• There were 1503 mortgages approved for first home buyers, a 29% increase compared to January 2023, but only a 6% increase compared to January 2022.

Article Summary

In a significant downward trend, the average purchase price for first home buyers in New Zealand has dropped by nearly $17,000 in January 2024, reaching the lowest it has been since February 2023. The average price was estimated at $656,557, a clear decrease of 2.5% from December 2023. The highest recorded average purchasing price was in April 2022, peaking at $718,000.

Conclusive data suggests that first home buyers are still primarily focused on the lower end of the property market. The average price they paid in January 2024 was 116% of the Real Estate Institute of New Zealand’s lower quartile selling price for the month. The prices paid by first home buyers have been slowly, but steadily, increasing against this lower quartile price since April 2022.

Closely tied to the Reserve Bank’s rules, the percentage of first home buyers taking out low equity loans (with less than 20% deposit) has seen an upswing. In January 2024, 31% of approved mortgages for first home buyers were low equity loans, which was almost double from the 16% recorded in March 2022. Meanwhile, despite a slight rise in average borrowed amount from last year, a substantial increase of 29% in approved mortgages for first home buyers was seen from last year.

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