Record Participation From First-Home Buyers

First-home buyers are entering the New Zealand property market in record numbers, driven by falling interest rates and improved affordability. According to the latest Cotality and Westpac NZ “First Home Buyer” report, first-time purchasers now account for 27.7% of all residential sales—the highest level ever recorded in New Zealand.

This surpasses the previous peak of 26.9% set late last year, highlighting just how active younger buyers have become in today’s softer market conditions.

OCR Cuts Boosting Confidence and Buying Power

The Reserve Bank of New Zealand’s 0.5% OCR reduction in October, followed by a further 0.25% cut, has pushed the Official Cash Rate down to 2.25%.

These back-to-back cuts are making mortgages more affordable and have significantly strengthened first-home buyers’ borrowing power. With rates easing and prices relatively stable, many Kiwis are choosing to act now rather than risk missing out as the market begins to shift.

What First-Home Buyers Are Purchasing

Despite economic uncertainty, the majority of first-time buyers are still securing traditional standalone homes rather than compromising on smaller dwellings. According to the report:

• 74% of first-home buyer purchases are standalone houses
• The average entry-level price is around $700,000, only slightly higher than last year
• Buyers are obtaining more value in what Cotality describes as a “soft market”

This trend is particularly evident in Wellington, where first-home buyers now make up 36% of all purchases—even as the region has just reversed an eight-month value decline.

Lending Trends: Bigger Deposits, Higher LVRs

More than half of first-home buyers are securing loans with 20% deposits, helping them avoid Low Equity Premium (LMI/Lenders Mortgage Insurance).

Westpac NZ’s lending data shows first-home buyers currently have an average Loan-to-Value Ratio (LVR) of 79%, up from 74% in 2022, indicating they are stretching slightly further while still remaining within responsible lending limits.

One downside noted in the report is the increasing average age of first-home buyers, now 36 years old, compared to 34 before Covid.

A “Goldilocks Window” for First-Home Buyers

Cotality and Westpac describe the current market as a “Goldilocks window”—not too hot, not too cold.

Key conditions creating this unique moment include:

• Stable or sideways-moving property prices
• Falling interest rates
• Higher housing inventory
• Reduced buyer competition
• Greater negotiating power

For many Kiwis, this combination represents the best opportunity to buy in several years.

Seven Expert Tips for First-Home Buyers in Today’s Market

1. Explore Support Schemes

Look into KiwiSaver first home withdrawals, Kāinga Ora’s First Home Loan (5% deposit for eligible buyers), and any regional grants that may boost your purchasing power.

2. Work with a Mortgage Broker

With rapidly changing rates, a broker can help you compare options and understand hidden conditions behind low-rate loans.

3. Secure Pre-Approval

A pre-approved mortgage, usually valid for 90 days, sets clear borrowing limits and strengthens your position when making an offer.

4. Aim for a 20% Deposit When Possible

Even if you qualify for a 5% loan, a higher deposit reduces your LVR, avoids LMI fees, and gives you access to better bank rates.

5. Prioritise Affordability

Choose a home that fits your essential needs and your pre-approved budget. A first home is your entry point, not your forever home.

6. Know Your Maximum Price

As competition gradually returns, decide your ceiling and stick firmly to it during negotiations.

7. Be Ready to Act Quickly

Have your financial documents, KiwiSaver history, and legal support ready so you can move fast once you find the right property. Never submit an offer without pre-approval in place.