How confident are New Zealanders of buying their first home?

Results From The First Home Buyer Confidence Survey: April 2020

The First Home Buyers Club recently conducted it’s First Home Buyer Confidence Survey canvassing its membership to get an indication of the confidence level of first home buyers to own their own home.

The key question was “How confident are you of buying your first home in the next 3 years?”

The Impact Of Covid-19 Lockdown On First Home Buyer Confidence

Due to the current Covid-19 lockdown, we also took the opportunity to ask two additional questions to get feedback on what impact first home buyers felt the lockdown would have on their short term hopes to buy their first home.  These questions consisted of two parts.

Firstly “How confident are you of buying your first home in the next 3 months or after Level 4 lockdown is over?” 

and secondly “During and after this COVID-19 Level 4 lockdown I am worried that:“

• I or other income earners in my family will lose my/our job
• I or other income earners in my family will earn less income
• The value of my savings for deposit and/or KiwiSaver has dropped
• House prices will drop
• Other

Comparision to the First Home Buyer Confidence survey from June 2018

Our previous First Home Buyer Confidence Survey was conducted in 2018.  For simplicity, this survey included just one question, “How confident are you of buying your first home in the next 3 years?”

What We Make Of The First Home Buyer Confidence Survey Results

Looking at the results from the 2020 survey,  the standout trend since the survey in June 2018,  show a swing from 41% Not Confident in 2018 to 49% Confident of buying their first home in the next 3 years.

Factors contributing to this positive trend are likely to be:

• reduced house price rises during this period.

During the 2 years since the initial survey the house price rises have been more moderate than the high increases from 2015 onwards.  These more moderate increases have helped give first home buyers more hope that they will be able to afford their first home.

• the introduction of KiwiBuild

While KiwiBuild has received a lot of negative press for it’s failure to deliver, first home buyers still see the program as an important option for a starter home.

• the enhancements to KiwiSaver HomeStart Grant and First Home Loan (Welcome Home Loan).

Changes to the HomeStart grant (now the First Home Grant) and Welcome Home Loan (now First Home Loan) mean there is only a requirement to have a 5% deposit.  With the task of gathering a deposit being one of the key hurdles for first home buyers, this change provides a boost to first home buyers hopes.

• record low interest rates.

With the current economic conditions resulting in the OCR being cut to .25%, the Banks have responded with record low interest rates.  With these rates likely to remain low for some time, there is a direct impact on the cost of potential mortgages.  Provided Banks remain open to mortgage approvals, first home buyers are likely to maintain a level of optimism of getting a pre-approval.

• reduced competition from investors and foreign buyers.

The impact of LVR restrictions and the foreign buyers ban has had the effect of dampening the share of these sections of the market.  In fact in recent times there have been several reports that first home buyers are making up a larger portion of home loan borrowing.

First Home Buyers Confident Of Overcoming The Lockdown

Overall the results from this confidence survey appear to show first home buyers are resilient and despite the current headwinds, seem positive about their chances of overcoming the immediate challenges in the not too distant future.  The sense is that first home buyers were experiencing encouraging conditions and believe when the lockdown is over they won’t be too setback to be able to take advantage of this.

We’re interested to hear your thoughts on the survey, you can get in touch with us via Facebook, Twitter or Email.