First-home buyers are holding on to their larger share of the housing market, despite lower sales activity.
CoreLogic's latest First Home Buyer report shows the number of purchases made by first-home buyers in the first three months of the year was 3260, the lowest number of quarterly sales since 2011.
However, CoreLogic NZ chief property economist Kelvin Davidson said first-home buyers, or FHBs, held on to their market share at 25 percent which was on par with previous record highs and well above the long-term average of 21-22 percent.
"There are many potential reasons for the relative strength of FHBs, but key ones are likely to include using KiwiSaver for all or part of their deposit, a willingness to compromise on the type and/or location of a property, and making use of the low deposit lending quotas at the banks.
"The wider downturn in values and relatively high stock of listings on the market has also helped finance-approved FHBs, and brought a wider range of properties back onto their radar."
Hamilton's market was the strongest, with a FHB market share of 33 percent in quarter one, with 30 percent in Wellington, while Christchurch, Auckland and Dunedin were also holding above average.
However, the FHB market share in Tauranga was quite a bit lower at 17 percent, but still above the average of 16 percent.
Davidson said there was a shift in the mix of FHB purchases, with standalone houses accounting for 75 percent of quarter one purchases, compared with 71 percent a year ago and well above the share of this property type across all buyers at 72 percent.
The increase in standalone homes had been at the expense of apartments, with FHB purchases down to 18 percent from 21 percent a year ago.
"Smaller dwellings are currently also relatively more popular with FHBs than normal in Auckland," Davidson said.
The median price paid by FHBs for free standing homes fell to $680,000 in the first quarter from $730,000 the year earlier.
Auckland had the highest FHB median in quarter one at $885,000, versus $1 million a year ago.
"It's been a solid three to six months lately for FHBs, as they've enjoyed plenty of choice amongst the existing stock of properties listed for sale, falling prices, and reduced competition from other buyer groups such as mortgaged investors," Davidson said.
"Looking ahead, even if the downturn in prices does end in the second half of this year, we doubt that the market is going to boom again straightaway - especially if caps on debt to income ratios are imposed in March or April next year, which now looks almost certain.
"In other words, FHBs should continue to see relatively favourable conditions for a while yet, albeit mortgage rates seem unlikely to suddenly fall sharply anytime soon."