Reserve Bank’s tactics of limiting number of low-deposit loans is affecting first-home buyers, study shows, and is rapidly changing the landscape of the Auckland property market as some suburbs surge ahead.
Lindy and Callum Malcolm, along with daughter Addison, are ready to move on after selling their Bond St property for $835,000. The proportion of house sales to first-home buyers has gone down in 90 Auckland suburbs since the Reserve Bank’s mortgage lending limits came in, according to a Herald analysis of 168 suburbs.
The detailed figures, provided by property data company CoreLogic, show the most up-to-date, suburb-by-suburb look at the number of first-home buyers – and the number of home buyers overall – in the three months before the new limits came in on October 1 (June-August), and the first three months of this year (January-March).
The company defined a first-home-buyer transaction as one where none of the new owners have owned property in New Zealand previously, and where the owners have also taken out a mortgage. The figures include apartments.
First-home buyers made up 20.9 per cent (2497) of the the total 11,933 home sales in the surveyed period before the loan-to-value ratio (LVR) changes. The changes restrict the number of mortgages banks can give to borrowers who have a deposit of less than 20 per cent of the home’s price. The proportion of first-home buyers dropped to 18.8 per cent (1616) of the total 8573 sales after the changes, a fall of 2.1 percentage points. The changes aim to cool rapidly rising property prices – the latest Real Estate Institute figures show Auckland has reached a record median high of $637,000 – but they have been criticised for unfairly affecting first-home buyers who would find it more difficult to raise a 20 per cent deposit. CoreLogic’s information shows suburbs with the biggest decreases in first-home buyers were Farm Cove (-31.3 percentage points), Sunnyvale (-30.7) and Lynfield (-30.1).Farm Cove had few sales to start with but first-home buyers had made up more than half of all sales in Sunnyvale and Lynfield before the LVR changes.
Some suburbs saw no sales to first-home buyers after the change, but they were areas which already had few sales because of high property prices, or were not typically favoured by young buyers because they are located further from the city. They were: Albany Heights, Eastern Beach, Farm Cove, Karaka, Omaha and Wellsford.Nine suburbs had only one sale to a first-home buyer before the change, while one suburb had none (St Marys Bay).The lowest number of overall buyers after the changes were Eastern Beach (10), Muriwai (10), Morningside (11) and Wellsford (11).The proportion of sales to first-home buyers went up in 75 suburbs.Suburbs with the highest rises were all in South Auckland: Red Hill (up 22.4 percentage points), Totara Heights (18.6) and Manukau (17.3), indicating the new-buyer market is looking for cheaper options further from the city. The highest number of first-home buyers after the changes were in Henderson (48), Massey (45) and Manurewa (42). Previously they were in Papatoetoe (81), Massey (77) and Henderson (74).If calculating the percentage of first-home buyers out of total buyers, the top suburbs were Avondale (40.5 per cent), Red Hill (40 per cent) and Bayview (36.2 per cent). Before the LVR changes they were Sunnyvale (52.2 per cent), Lynfield (52 per cent) and Otahuhu (39.8 per cent).The highest number of overall buyers before the changes were Auckland Central (747), Papatoetoe (299), Manurewa (297) and are now Auckland Central (430), Flat Bush (209) and Remuera (206).