Tauranga first-home buyer Erin Meijer.
After seven years of saving and sacrificing, tomorrow Tauranga 33-year-old house hunter Erin Meijer moves into her first home.
And she has good news for other first-home buyers, saying the market seemed “pretty good at the moment” with “lots of houses” within her price range and little competition.
CoreLogic data shows Tauranga property prices are down 16.7% from their post-Covid peak, with local agents and real estate professionals saying first-home buyer activity could be a factor.
Restaurant manager Meijer said it felt “pretty amazing” to have purchased a home in Parkvale. She paid in the “late $600,000s” for the home, with about a 23% deposit using her KiwiSaver and savings.
“Twenty per cent didn’t quite get me to the house I wanted to purchase so Mum and Dad ended up having to top up the difference a little bit to get this house.”
Meijer said buying a home had been her goal for seven years.
“It was pretty hard. I’ve only had a couple of holidays and definitely limiting what I’ve been doing over the past few years to make it happen.”
In the past five years, her mortgage applications were either not accepted or not approved for enough money to buy.
She became a client of Tauranga mortgage adviser Dave Williams in June.
“It happened pretty quickly… I was expecting to have to look around for a lot longer but it was the first house I put an offer on.”
“It didn’t seem very competitive at all.”
Meijer said it was a “pretty new” three-bedroom home with double-glazing, full insulation and a “little bit of a garden”.
She planned to rent out two of the rooms of her new home to boarders.
Loan Market mortgage adviser Williams said first-home buyers had been “really active” in the past 18 months, partly due to less competition from investors.
“It’s been their opportunity to have their offers taken quite seriously.
“Prior to that, they were pipped at the post nine times out of 10 by investors who had very clean offers… "
Other factors included the Government changing rules for Kāinga Ora’s First Home Loan and increasing income thresholds and price caps, which he said “helped a lot of people with really low deposits”.
Announced in Budget 2022, the Government increased house price caps for the First Home Grant for many places throughout the country to align with the market. It also removed house price caps entirely from the First Home Loan, which lowers the required deposit from the usual 20% to 5%.
Williams said first-home buyers were “probably feeling a bit more confident” now that interest rates were going down.
Tauranga residential property values are down 16.7% from their post-Covid peak, CoreLogic data shows, with the median property value in July being $925,166.
Only Auckland had a higher median property value, at $1,095,013.
In Rotorua, values were down 14.9% from their post-Covid peak to a median $598,402.
Bayleys and EVES Realty Waikato/Bay of Plenty/Taranaki chief executive Heath Young said the post-Covid economic environment had been marked by uncertainty.
“Rising interest rates, inflation, and government policy has meant a weaker demand-supply equation for real estate which over time has resulted in price decreases.”
Young said price rises during the Covid, low-interest rate environment increased by about 40%.
“Pricing is still up 24% compared to pre-Covid levels.”
Young said first-home buyer activity levels had been consistent in the past year, supported by reducing prices, less competition, and more time to make choices.
“Recently there has been a noticeable return of investor buyers coming back into the market.”
Ray White Pāpāmoa director Greg Purcell said “quite a few” first-home buyers were purchasing this year.
“So you could put together an argument that a lot of people buying under the $800,000, $900,000 mark would skew that stat.”
Purcell said investors had “stuck their noses over the parapet” this year due to changes in legislation including reducing the bright-line test from 10 to two years and restoring mortgage interest deductibility for residential investment properties.
OneRoof editor Owen Vaughan said values “picked up” across the country in the second half of 2023, resulting in increased sales as people felt “a little bit more confident in the market”.
“This year, we saw the result of that positivity where a whole heap of people decided to list their house.”
Vaughan said there was a “significant lift” in listings at the start of the year.
“In the last three months though … the general conversation about the economy has changed. It’s all a bit doomy and gloomy.”
He described house values dropping as a “secondary slump” mainly due to high-interest rates.
Vaughan said agents had reported a “change in sentiment from that doom and gloom” due to “better-than-expected” inflation numbers, some fixed term rate drops, and an “increased expectation” of the Official Cash Rate being cut.
In a media release, CoreLogic NZ chief property economist Kelvin Davidson said “the general mood and commentary” around the Official Cash Rate and inflation had shifted in recent weeks.
“With the Reserve Bank now moving towards an easing stance, it only seems to be a matter of when - not if - the cash rate is cut in 2024.
“Mortgage rates themselves have already been drifting lower lately. That news will obviously have been welcomed by existing mortgage holders and aspiring buyers.”
Data from Stats NZ showed 33,627 new homes nationally were consented in the year ending June 2024 - down 24% on the year prior. .
In Tauranga, 593 homes were consented - down 36% from 929 in the year ending June 2023.
Chief executive of economic development agency Priority One Nigel Tutt said the lower consent numbers reflected a slowdown in the residential housing market caused by high-interest rates.
“While this is understandable in difficult economic conditions, in the longer term we need to address the shortage of housing in this area.
“For this, we’ll need the sector to bounce back quickly when conditions are expected to improve late-2024 / early-2025.”
Tauranga City Council building services manager Steve Pearce saidnew building consent applications had dropped since “record highs” in 2021.
He said the initial 2021/2022 decrease in volumes followed rising mortgage rates but kept declining over the past 12 months even as interest rates were “reasonably static”.
Pearce said in particular, Tauranga had seen fewer standalone houses being built. These were typically built by residential building companies for new owners, so the volumes were driven by the current state of the economy.
“We have seen a comparative increase in the building of townhouses and speculative (spec) houses.”
Pearce said this was a nationwide trend and not unique to Tauranga.
“We’re hearing that the building industry is starting to see an increase in inquiries, so we expect that applications for new dwellings will increase in the future; it’s just a matter of time.”
Megan Wilson is a health and general news reporter for the Bay of Plenty Times and Rotorua Daily Post. She has been a journalist since 2021.
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