10 Top Things To Think About If You Are Looking To Buy Your First Home in 2025.

Thinking about jumping into the property market in 2025? In this week’s update, we will give you our 10 Top Tips for what's happening with mortgages and house-buying, so you’re armed with everything you need to know if you're planning to step onto the property ladder in the coming year.

1. House Prices: Slow and Steady Wins the Race

Good news! House prices are going up, but not crazy fast. According to CoreLogic's chief economist, Kelvin Davidson, house prices are projected to rise by around 7% in 2025. This increase, while significant, is considered relatively modest, but it's not the wild price jumps we've seen before. This means you might have a better shot at finding a place you can afford. 

2. Mortgage Rates: More Bang for Your Buck

One of the most positive trends for first-time buyers is the expectation of lower mortgage rates in 2025.  This trend of falling interest rates is expected to continue throughout 2025, making mortgages more affordable for new entrants to the market.

3. More Houses on the Market

There will probably be more houses up for grabs in 2025. CoreLogic predicts that property sales volumes will rise to approximately 90,000 in 2025, up from around 80,000 in 2024. While still slightly below average, this increase represents a return to more normal levels of market activity. For first-time buyers, this means more opportunities to find suitable properties, but also potentially more competition.

4. First-Time Buyers are Rocking It

Encouragingly for those looking to buy their first home, first-home buyers continue to be a dominant force in the market. In 2024, they accounted for over 25% of sales, and this trend is expected to continue into 2025. This challenges the notion that young people are locked out of homeownership and suggests that there are still opportunities for new entrants to the market.

5. Watch Out for DTI’s

Banks are getting pickier about how much debt you can have compared to your income. It's called the Debt-to-Income ratio (DTI). As mortgage rates fall, banks' internal serviceability test rates are also decreasing. This brings DTI rules more into play, potentially restricting borrowers' capacity to secure larger loans. First-time buyers should be prepared to navigate these regulations and understand how they might impact their borrowing capacity. This is where engaging a Mortgage Adviser early on in the process will come in handy.

6. What Buyers are Worried About

While worries about interest rates have nearly vanished, with only 1% of real estate agents citing it as a major issue, new priorities have emerged. Access to financing and income stability are now top concerns for buyers. First-time buyers should focus on strengthening their financial position and ensuring stable income to improve their chances of securing a mortgage.

7. Location, Location, Location

Some areas are seeing house prices go up a bit, while others are going down. It's like a house price rollercoaster out there. First-time buyers should research thoroughly and consider various regions, as opportunities and challenges can differ significantly across the country. Do your homework on different areas – you might find a bargain!

8. Government Help

Keep an eye on government initiatives aimed at improving housing affordability. Programs like the First Home Loan Scheme, can provide significant assistance to first-time buyers with low deposits. Stay close to your Mortgage Adviser as they can keep you informed about any new or updated programs that might be introduced to support first-time buyers.

9. The Balancing Act

2025 presents an interesting balancing act for first-time buyers. On one hand, lower mortgage rates improve affordability and borrowing capacity. On the other hand, stricter DTI rules may limit the size of loans available. A Mortgage Adviser will be able to carefully assess your financial situation so you can adjust your expectations or strategies accordingly.

10. Think Long-Term

Finally, while the 2025 outlook appears favourable for first-time buyers, it's important to think long-term. Consider factors like potential interest rate changes over the life of your loan, job security, future plans, and being able to handle payments if things change. Buying a home is a significant long-term investment, and planning beyond the initial purchase is essential.

So there you have it! The property market in 2025 is looking pretty good for first-time buyers. Lower mortgage rates, steady price growth, and lots of opportunity in the market. Just remember to do your research, keep your finances in order, and seek professional advice. Feel free to reach out if you need a hand with your finances!

Cheers

Dallas

☎️027 218 8795 📩dallas.roberts@loanmarket.co.nz 🌐loanmarket.co.nz/agile