Following the introduction of the LVR speed limits by the Reserve Bank in October, expectations were that the number of first home buyers would decline.
The latest data produced by CoreLogic shows that first home buyer activity declined in December and January. For most of the previous two years, the percentage of sales in a month that could be attributed to first home buyers sat around the 20 per cent mark. In December this dropped to 19 per cent and then in January dropped further to 18 per cent. This is the lowest percentage of monthly sales by first home buyers in any month since mid-2010 when it dropped to slightly below 17 per cent. It is also the lowest actual number of first home buyers in any month since late 2010/early 2011.
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What is also evident is that the percentage of first home buyers increased in September and October, although there had been months earlier in the year where the absolute number of first home buyers had been higher. This increase in first-home buyer activity was most likely in response to strong signals from the Reserve Bank that the speed limits were likely to come into place in October. This led to a flurry of activity from first home buyers keen to secure a property before the limits were enforced.
When we first published this new series of first home buyer stats back in November, we showed that some parts of the country had higher levels of first home buyers than others. Now that the speed limits have been in place for a couple of months we can assess whether these areas have dropped or not.
To measure the change before and after the LVR speed limits we have looked at the three months from June to August 2013 as before, and December and January 2014 as after. We have then compared average percentage of fi rst home buyers in each of those time periods and compared them.
What is clear is that almost all of the main towns and cities have dropped. The largest drops are in Hamilton, Rotorua, Napier and Wellington City where the percentage has dropped more than 4 per cent. Some areas have witnessed increases.
Auckland City has increased slightly; so, too, have Palmerston North and Porirua which had amongst the highest level of first home buyers in the country. Upper Hutt increased by 4.3 per cent which supports some of the anecdotal evidence that buyers in Wellington are starting to look a little further afield. Waimakariri is also up while Christchurch and Selwyn are down, and this could represent a similar trend.
It is still early to pick trends, and in many of the smaller areas the percentage of first home buyers has been relatively volatile month to month. We will keep tracking these numbers and provide regular updates to see if these trends continue.
* CoreLogic is a leading property information, analytics and services provider created by the merging of PropertyIQ and Terralink International. CoreLogic helps clients identify and manage growth opportunities, improve performance and mitigate risk through innovative, technology-based services such as QV.co.nz.
* Jonno Ingerson is director of research and analytics at CoreLogic.