Is the window of opportunity closing for first-home buyers?

The real estate landscape is ever-changing and for first-home buyers, getting a foothold on the property ladder can often feel like chasing a moving target.

According to industry experts, the target is about to shift again as the market reaches a tipping point. We take a look at what is driving the predicted changes and how first-home buyers can seize this window of opportunity.


is the window of opportunity

Stabilised Interest Rates

After a period of volatility, interest rates seem to have stablised. With the Official Cash Rate (OCR) expected to have reached its peak at 5.5%, we should have seen the end of mortgage rate spikes.
Rapson Loans & Finance Director Brooke Reynolds says with the way interest rates are tracking, there is a glimmer of hope for first-home buyers needing more predictable repayments.
Only time will tell how interest rates will change, but the Reserve Bank of New Zealand has indicated we are in for rate cuts as early as the middle of next year.
“With rate cuts comes the potential for higher house prices, as lower borrowing costs often stimulate demand in the housing market,” says Brooke.

Easing LVR Restrictions

In June, the Reserve Bank loosened its Loan-to-Value Ratio (LVR) rules, allowing investors to purchase properties with lower deposits. Previously, they required a 40% deposit; now the minimum is 35%.
Banks are also now able to lend to a higher number of first-time borrowers who don’t quite have a 20% deposit. Previously limited to approving 10% of their mortgages to borrowers with low deposits, they can now approve low-deposit loans for up to 15% of their borrowers.
“These changes open up new opportunities for home buyers of all stages,” says Brooke.
With more formerly locked-out investors finding entry points into the market and more low-deposit buyers being granted mortgages, demand for homes is likely to surge.

Unprecedented Immigration

Another factor that has consistently played a significant role in influencing housing trends is immigration.
Between April 2022 and April 2023, New Zealand experienced an unprecedented immigration influx, with just over 72,000 people migrating here.
This surge in population growth is projected to create a growing demand for housing. It could also stimulate economic growth and, therefore, housing market activity.

Supply and Demand Imbalance

New Zealand is facing a significant challenge around housing supply and demand as developers and builders struggle to keep pace with this growing demand for housing.
Building consents for new constructions have seen a decline of around 11-12% in the year from May 2022 to 2023, putting more pressure on the market.
Supply and demand is a key driving force behind house prices.

It is Already Happening

Another telltale sign that a shift in property prices is on the horizon can be seen in CoreLogic House Price Index (HPI), a trusted compass for market trends.
Last month saw the smallest house price dip in months – a mere 0.4% decline. One major city, Wellington, even saw a price increase of 0.3%, the city’s first rise since February 2022.
This gentle correction could herald a significant turning point for the housing market.


Outside-the-Box Solutions

Mortgage broker Brooke is noticing more first-home buyers coming up with innovative solutions to get themselves onto the property ladder.
One strategy she is seeing more often is would-be homeowners joining forces with their friends.
Rapson Loans & Finance recently worked with 2 childhood friends who combined their deposits to secure their first home in Tauranga.
Using KiwiSaver, their personal savings, gifted funds, and the government’s First Home Grant, they managed to put down a 16% deposit on a property. With the expert guidance of the team at Rapson, their journey toward homeownership became a reality.
If you’re considering unconventional methods, such as purchasing a home with friends, Rapson Loans & Finance is here to offer insights and personalised advice to guide you every step of the way.

Expert Guidance

When buying a home, there’s no one-size-fits-all solution. Your unique circumstances and partnerships can shape the way you make your property ownership dreams a reality.
That is why working with experts who understand the nuances of market trends, financing options, and regulatory changes can be the best route to take.
Whether it’s deciphering the implications of eased LVR restrictions, or exploring innovative pathways to homeownership, Rapson can help aspiring homeowners make informed decisions.
With house price increases projected to restart in 2024, first-home buyers looking to take advantage of house prices at their low point may need to act now.

The signs are there and 2023 could be the prime time to embark on your homeownership journey. Get in touch today for professional guidance on your first-home journey.