First-home buyers entering property market despite soaring house prices

First-home buyers entering property market despite soaring house prices

First-home buyers have been determined to enter the property market despite sky-high house prices – making up an increasing part of the Southern real estate market, according to CoreLogic.

CoreLogic’s data for the last quarter of 2020 reveals that first-home buyers made up 27% of all Dunedin buyers compared to only 24% for the same period in 2019. The number of first-home buyers in Invercargill increased from 26% to 28%, while the rates were steady in Queenstown (17%) and Central Otago (9%).

In Dunedin median prices increased by 1.9% to $582,000, Invercargill 2.5% to $379,000, Central Otago 1% to $592,000, and Queenstown 1.3% to $1.21 million.

CoreLogic head of research Nick Goodall said first-home buyers had changed their expectations about what and where they could buy, used their KiwiSaver funds, and taken advantage of low-interest rates to enter the market. However, doing this might not work in the future.

“At the current rates of growth, entering the property market will certainly become more difficult throughout the year,” Goodall said, as reported by Otago Daily Times.

Nidd Realty owner Joe Nidd added that places in Dunedin previously known as state housing areas and seen as undesirable were now fiercely contested by first-home buyers. Investors had also become active again, increasing demand further.

Well-built houses on good-sized sections with good views and sun are also in demand, regardless of areas’ previous perceptions.

Report reveals growing investment appetite for build to rent

Report reveals growing investment appetite for build to rent

The housing crisis has resulted in a significant increase in investment appetite for build to rent (BTR) developments in New Zealand, according to commercial real estate firm JLL.

BTR involves the development of multi-unit residential buildings for long-term rentals rather than sales to individual owners.

According to JLL’s latest report, 2020 highlighted the significance of BTR in addressing the housing crisis as the future apartment pipeline in major cities is under pressure in the short and medium term.

JLL senior director Paul Winstanley said BTR could help address the housing crisis by contributing to the construction of a wider range of high-density housing.

“While BTR isn’t the only solution to any housing crisis, it has proven globally to be a key piece of the puzzle to delivering quality homes with a clear community focus in urban areas for those who are not ready, or able, to buy for the foreseeable future,” Winstanley said, as reported by Stuff.

JLL said BTR is set for a breakthrough this year as global investor demand for high-quality BTR developments continues to grow.

“We are working with a number of larger-scale developer/investors who are looking to bring BTR at scale to New Zealand. We firmly expect one or two of them to break ground in New Zealand in the next 12 to 18 months,” Winstanley said.

However, Winstanley said the viability of BTR is still tricky, so government support is needed.

“To that end, it is crucial there is widespread collaboration as well as commitment and a clear line of communication with [the] government to influence policy and re-frame the housing debate to include BTR as part of a solution to the housing crisis,” he continued.

Housing stock hits record low

Housing stock hits record low

First-home buyers and investors might struggle to climb the property ladder this year as housing stock hit record low across New Zealand in December despite a year-on-year 19.2% increase in new listings, according to realestate.co.nz.

The latest data released by realestate.co.nz revealed 6,592 new listings in December 2020, with 1,064 more properties coming on to the market last month than in December, 2019. However, housing stock was still down year-on-year in almost every region in New Zealand, with 16 of 19 regions dropping to all-time lows since records began 13 years ago.

“Although it’s promising to see pockets of new listings coming on to the market across the country, it was largely our major centres that did the heavy lifting last month,” said Vanessa Taylor, a spokesperson for realestate.co.nz.

“We’re still seeing a lot of competition in the market, and I expect this will continue to drive strong prices in the first quarter of 2021, encouraged by low mortgage rates and a lack of international travel.”

Only 12,932 homes were available for purchase at the end of December, which was a 13-year record low and 29.1% less than the same time last year, according to realestate.co.nz.

Only Auckland, Gisborne, and Central Otago/Lakes avoided hitting 13-year record stock lows last month. Meanwhile, Wairarapa, Coromandel, and Nelson & Bays had the lowest stock compared to 2019, decreasing by 58.5%, 50.3%, and 49.2%, respectively.

“The stock shortage will likely continue to prove challenging for buyers at the beginning of 2021. This is a long-term factor impacting the New Zealand market, and the number of Kiwis returning from overseas, combined with low mortgage rates and lack of international travel, is only adding to the demand for property,” Taylor said.