According to REINZ February 2023 Property Report, the median house price in New Zealand decreased by 13.9 per cent year on year. At the same time, property website Realestate.co.nz showed 29,284 residential dwellings available for sale at the end of March, the highest number in any month of the year since November 2015. With lower house prices and less heat in the market, now may be the right time to buy a first home, with more opportunities for first home buyers.

Lower house prices vs. rising interest rates

What to do when faced with rising interest rates and decreasing house prices is the conundrum for many first home buyers. Rising interest rates tend to put the brakes on new property purchases, particularly at a time when household budgets are being stretched by high inflation. However, buying in a lower priced market makes financial sense for a few reasons:

• There are more listings to choose from and fewer investors to compete with. Less pressure in the market means there’s more time to do due diligence and make considered decisions.
• If history tells us anything it’s that property moves in a cycle and house prices are likely to climb again. Getting into the market while prices are lower could offset a higher interest rate, provided you can afford the higher repayments.
• Vendors are more likely to negotiate on price at this time so buyers may be able to get the house of their dreams for a better price.
• Lower prices mean borrowers won’t have to save as big a deposit which could be the difference between buying now or waiting for several years to save more.

Getting help with buying a first home

The number of first home buyers getting a financial kickstart from Government is rising, with around 1865 homes purchased between July and September 2022 using Kāinga Ora’s First Home Grant, up 11% from the same time the previous year and a 60% increase on the previous quarter. This follows Government’s changes to the price caps on First Home Grants and Loans earlier in 2022.

Here's a reminder of the financial assistance available to eligible first home buyers in New Zealand:

• Kāinga Ora support offers a range of home ownership options for first home buyers buying a home or land to build on including:
  • First Home Grants: If you’ve been contributing to your KiwiSaver for at least 3 years you may be eligible for a First Home Grant of up to $10,000 to top up your deposit.
  • First Home Loans: A First Home Loan can make it easier for you to get into your first home by lowering the required deposit to 5%.
• KiwiSaver First Home Withdrawal: You can apply to withdraw your KiwiSaver savings to put towards buying your first home if you have contributed to your KiwiSaver scheme for at least 3 years.
• Guarantor: Have a family member be guarantor, using their own home as security for the borrower’s loan or for their deposit.

For more first home buyer help, including information about buying a home with a low deposit, visit the Mortgage Express website. Contact a Mortgage Express branded mortgage adviser to get financial advice around buying a first home or saving a deposit to buy a first home.