Essential housing needs drive demand: the Auckland suburbs first-home buyers favour

Media reports suggest recent house price falls have made Westgate, Glen Eden and Karaka more affordable for first-home buyers. A concentration of new townhouse developments coming onto the market in these suburbs has significantly improved first-home affordability compared with last year.

Westgate has several townhouse developments clustered near the motorway and shopping mall

 

First-home buyers face growing difficulties

 

Tighter lending rules and higher mortgage rates have made buying a home increasingly difficult for many first-home buyers this year. OneRoof data shows that, during the peak of the CCCFA and LVR credit tightening, first-home buyers in Auckland purchased 2681 properties between month 1 and March 2022, a sharp fall of 23% from the same period a year earlier. The figures suggest first-home buyers in Hamilton faced an even tougher situation: they purchased 257 properties between month 1 and March 2022, a striking 30% decline from the same period in 2021.

 

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First-home buyers are expanding their search into new suburbs

 

Sales data supplied by OneRoof's data partner Valocity, covering townhouses, units, standalone homes and lifestyle properties, reveals which suburbs first-home buyers in Hamilton and Auckland prefer. Comparing first-quarter sales in 2022 and 2021, we find that first-home purchases in Westgate, Glen Eden, Karaka and Otahuhu between month 1 and March this year increased by 36, 33, 30 and 14 respectively compared with the same period last year. These suburbs therefore recorded substantial increases in first-home purchases. Overall, it is worth highlighting that, driven by their need for a home, first-home buyers increased their share of the Auckland market slightly by 1%, and their share of the Hamilton market by 2%.

 

Valocity senior research analyst Wayne Shum said the growing popularity of these suburbs could reflect recent price falls making Westgate, Glen Eden and Karaka more affordable for first-home buyers. Falling house prices and reduced borrowing pressure mean buyers can now afford homes in suburbs they previously wanted to buy in but could not afford. He noted that hundreds of homes aimed at first-home buyers were under active construction in popular areas including Karaka and Westgate, near the soon-to-be-completed Costco. Shum also said many new townhouse developments in Otahuhu were attracting first-home buyers because of the suburb's relative proximity to the city centre. Glen Eden's train connections were likewise drawing first-home buyers to its new townhouse developments.

A townhouse with two bedrooms and two living areas on Rosier Road in popular Glen Eden

is priced at NZ$769,000

 

Barfoot & Thompson agent Ying Li Howe, who sells property in West Auckland, said first-home buyer numbers were increasing in Glen Eden and Westgate, possibly because many new townhouses began reaching completion and settlement in early 2022. Over the past four months, she had handled settlements for 30 townhouses in Glen Eden's Rosier Park development. Most had two bedrooms and a study, with prices around NZ$760,000–770,000. Howe said their prices were already high last year and had barely fallen since. She is currently marketing the second stage of Rosier Park, including a townhouse with two bedrooms and two living areas at 61/102 Rosiers Road, priced at NZ$769,000.

 

Howe said Glen Eden had become popular with first-home buyers in recent years because of its low house prices, train station and zoning for good schools such as Konini School, Kaurilands School and Glen Eden Intermediate. The suburb also provides a useful connection between Auckland's city centre and lifestyle property areas such as Piha and Oratia. Westgate's appeal lies in convenient motorway access and the modern Northwest and Westgate shopping centres, which provide a wide range of everyday amenities. Many reasonably priced townhouse developments now under construction have been well received by first-home buyers. Comparable properties in Westgate may cost around NZ$50,000 more than those in Glen Eden.

Townhouses in Westgate's Kauri Green development start at NZ$795,000,

with two bedrooms, a living area and a bathroom

 

Meanwhile, Auckland suburbs that previously attracted first-home buyers through their affordability also recorded the largest falls in property sales when comparing the period from month 1 to March over the past two years. In South Auckland's Papakura, 130 first-home buyers purchased properties between month 1 and March this year, down 38 purchases from the same period last year. Purchases fell by 42 in Maseey, 33 in Hobsonville, 31 in Pukekohe and 26 in Flat Bush. Manurewa, Papatoetoe and Titirangi each recorded 21 fewer first-home purchases than a year earlier.

 

Ray White Papakura principal Sandra Bullock believed the drop in first-home buyer numbers early this year was because investors had snapped up homes in Papakura that first-home buyers would otherwise have bought, pushing prices to an “unreasonable” level. Another sales consultant at the branch, Anthony Russell, said the fall in Papakura sales was consistent with the wider Auckland market, as people were finding it harder to borrow. First-home buyers now had to spend more on mortgage repayments while being able to borrow less, preventing them from purchasing their first home, he said. Changes to CCCFA rules in early July appeared to have made little difference to the market. He was seeing several generations pooling money to buy homes and repay mortgages. Russell added that Papakura was one of Auckland's more affordable suburbs and that many developers had now left the market.

 

 

Notably, most Hamilton suburbs recorded almost no growth in first-home purchases when comparing the period from month 1 to March over the past two years. Only St Andrews recorded an increase, with 7 more first-home buyers than in the same period last year. First-home buyer numbers in Chartwell halved, falling by 15 to a total of 16 purchases. More affordable suburbs followed: Nawton had 14 fewer buyers, with 21 purchases in total, while Frankton had 10 fewer, with 13 purchases. Fairfield was down 9, with 12 purchases; Dinsdale fell by 9, with 21 purchases; and Huntington also fell by 9, with 15 purchases.

 

EVES Waikato general manager Sean Foster said Hamilton home sales fell markedly last year, mainly because stricter CCCFA lending application rules made it harder for first-home buyers to obtain loans. Over the past three weeks, however, they had begun to see first-home buyers return. He believed this reflected buyers securing finance over the past 90 days rather than the slight decline in house prices. He expected more first-home buyers to enter the market and, with their mortgage advisers' help, buy the homes they wanted to meet their housing needs.