Drop in first home buyers’ attendance at open homes

Investors win as first home buyers’ attendance at open homes and unconditional contracts drop

Survey findings released today has found First National real estate offices report on average a 27% drop in first home buyers’ attendance at open homes.

In October 2012, 58% of First National offices reported that 20% (or less) of attendees at open homes were first home buyers.

Whereas in October 2013, first home buyers attendees had decreased, with 85% of First National offices now reporting that 20% (or less) of attendees at open homes were first home buyers.

The research was commissioned by First National Group New Zealand to get an early indication of the impact since the loan-to-value ratio (LVR) restrictions came into force.

The survey also found on average the number of unconditional contracts for first home buyers halved last month compared to this time last year.
The regions, where the First National network is strongly represented, has felt the LVR restrictions the fastest.

Colleen Milne, CEO of First National Group NZ says, “While some sources say it is too early to gauge the effect of the LVR constraints, our offices are already experiencing a slow down.”

First National Blenheim reports a very obvious drop off. Only two first home buyer contracts went unconditional last month compared to seven in October 2012.
Owen Norrish from First National Blenheim says his business has noticed a 40% decline in first home buyer attendance at open homes between October 2012 and 2013.

“The LVR has almost totally taken away the bottom tier of the market, which filters through to second and third tier buyer groups,” says Mr Norrish.
“Investors are showing increased interest but are being very cautious and only wish to purchase at bargain prices.

“There has also been a very noticeable drop off in first home buyers attending open homes. This buyer group is frequently expressing their frustration at the new LVR rules, which most see as a government restriction,” Mr Norrish adds.
Bob Brereton, Chairman of First National Group and owner of First National Motueka, says there is a noticeable decline in first home buyer property enquiries.

“I believe it has further enhanced the position and options of investors by removing the first home buyers from a market with limited opportunities,” he says. “In my opinion, the LVR is having the reverse of the desired effect.”
First National Gore had five first home buyers under unconditional contracts in October 2012, compared to zero last month.

“The LVR has slowed the first home market and vendors are dropping their prices,” says Graham Maxwell from First National Gore.

Nelson had five first home buyers under unconditional contracts last October compared to one in 2013. This office says it has experienced a drop of 50% of first home buyers’ attendance at open homes within the year.
“The LVR has directly affected our market,” says First National Nelson owner Mark Rumsey.

“We have a significant reduction in enquiry and open home investors in properties $350,000 and below.”

David Price from First National Invercargill says, “The quantity of sales in the lower end of the market that normally sell to first home buyers has decreased by approximately 25%. This in turn affects the next bracket.”

First National Papakura has found less first home buyers and more interest from investors. While the Glendene office reported a 10-20% drop off in first home buyer attendance at open homes last month compared to October 2012.

Whakatane First National owner Debra Gibbons stated they had a number of “very unhappy” pre-approved first home buyers now unable to purchase.

Ms Milne says, “We understand first home buyers may currently feel disadvantaged with the LVR restrictions but we hope they haven’t become disillusioned.

“We recommend first home buyers seek financial advice on how to reach their goals and continue to keep saving. We certainly would not like to see an entire segment of the market unable to start their climb onto the property market.”

-Ends-

© Scoop Media