First home buyers are paying $659,481 on average to get into a home of their own

By Greg Ninness, Interest.co.nz

The number of first home buyers getting into a home of their own is steadily increasing while the average price they are paying is slowly declining.

According to the Reserve Bank, new mortgages were approved for 2447 first home buyers in March, up 7.7% compared to March last year. However, that's down 26.7% compared to the peak of 3338 mortgages approved to first home buyers in December 2020.

Of the mortgages approved to first home buyers in March, 750 (30.6%) were low equity loans where the buyers had less than a 20% deposit.

The percentage of low equity loans to first home buyers has been relatively stable at around 30% since May last year, but is well down from the peak of 40.3% achieved in May 2020.

However, while first home buyers remain very active in the market, the numbers suggest they are being cautious about the prices they are paying.

Interest.co.nz estimates the average price paid by first home buyers was $659,481 in March.

Although there are monthly fluctuations both up and down in the average purchase price, as the graph below shows, the long term trend has been a gradual decline since it peaked at $717,681 in December 2021.

Although first home buyer activity tends to be less volatile than other segments of the housing market, it still follows seasonal trends.

So it's likely that the number of homes being purchased by first home buyers will start to wane as we head towards winter.

This story was originally published on Interest.co.nz and has been republished here with permission.