First home buyers are playing a larger role in the national property market, highlighting how conditions have shifted in recent months.
Data from Cotality shows first home buyers accounted for 27% of property purchases in the first three months of the year, well above their long-term average of 22%.
Several factors are supporting this group. “Obviously, lower house prices and reduced mortgage rates help, as does access to KiwiSaver for at least part of their deposit. But not even needing to save a 20% deposit in the first place is proving beneficial too,” according to Cotality. The data shows that more than half of first home buyer loans in January and February were written with less than 20% equity.
Other buyer groups are showing more typical patterns. Mortgaged multiple property owners – often smaller-scale investors – made up 24% of purchases, in line with their long-term average. Meanwhile, relocating owner-occupiers accounted for 26%, below their usual share of 28%.
Different forces shaping each buyer group
Cotality said smaller investors are driving activity among multiple property owners, particularly those purchasing their first rental property. Lower prices, falling mortgage rates and the return of full interest deductibility have improved the numbers for investors.
Whereas a typical new investor may have had to find an extra $400–$450 per week when property prices were higher and mortgage rates were 7% or more, that’s now fallen to about $150–$200, according to Cotality. That’s made investing more achievable for some.
For owner-occupiers looking to move, confidence remains a key factor. “History shows that they take their lead from wider consumer confidence levels, economic growth, and job security,” Cotality said, noting that patchy economic conditions have kept this group subdued for now.
Uncertainty clouds the outlook
Looking ahead, the outlook is less certain. The ongoing war in the Middle East is adding another layer of unpredictability to both the economy and housing market.
Cotality suggested earlier forecasts for rising sales and modest price growth may now be optimistic, with property values potentially remaining flat or even slipping slightly this year.
Even so, shifts in market share do not necessarily mean fewer buyers. If overall sales increase, the number of transactions could still rise across multiple groups, even if their relative shares shift.
Understanding how these different buyer groups are behaving can help inform decisions about timing and strategy in the current market.
Clients navigating today’s market conditions may benefit from clarity around their borrowing options or purchasing plans. I’m always happy to help if you’d like to connect with us.
