First home buyers getting more bang for their buck

In a market where available house sale listings are abundant and buyers hold most of the pricing power, first home buyers (FHBs) are ascendent.

Many FHBs have been able to buy bigger homes without a significant increase in purchase prices.

In the inaugural Cotality-Westpac NZ First Home Buyer Report data show 75% of FHBs purchases this year have been standalone houses — the highest share since 2020 — and the median price paid has held steady at $700,000, unchanged from the past two years and lower than 2022’s $719,000.

The new report draws on Cotality’s (formerly CoreLogic) extensive housing market, as well as Westpac’s information about borrowers, to offer fresh insights into the purchasing behaviours, property preferences and financial profiles of New Zealand’s FHBs.

First home buyers accounted for nearly 25% of all property purchases across the country between January and April 2025 — well above the long-term average of 21–22%.

The data show many FHBs are not entering the housing market at the lowest price. While the FHB median price is lower than the overall buyer median of $780,000, it is significantly higher than the lower quartile of $585,000, particularly in urban centres such as Auckland, Wellington and Hamilton.

Standalone houses continue to be the dominant purchase type in most main centres. In Dunedin, 90% of FHBs bought standalone homes this year, with Hamilton and Tauranga both close behind at 89%. However, the share is comparatively lower in Auckland (64% vs an average of 67%), Wellington (67% vs 73%), and Christchurch (66% vs 77%) — likely reflecting both greater availability and affordability of smaller dwellings, including townhouses and apartments.

About 18% of FHBs bought townhouses compared to 15% for all buyers but picked up relatively few apartments and lifestyle properties — 2% and 3% respectively.

FHBs pay the most in Auckland, at a median of $903,000 so far this year, which is $127,000 less than the all-buyer median, but $114,000 more than the all-buyer lower quartile.  Median FHB prices for other areas, include $767,000 in Tauranga, $740,000 in Wellington, $705,000 in Hamilton.

Of the main urban areas, the highest median figure has been in Queenstown at $1,107,500. Invercargill has the lowest at $430,000.

It reflects a deliberate choice by buyers seeking value but not necessarily sacrificing location or housing quality to get it.

Lower borrowing costs

The recent drops in borrowing costs means that home ownership is now a lot more accessible for many New Zealanders, Satish Ranchhod, Westpac senior economist says. 

If an FBH has a 90% mortgage with a 25-year term, the roughly 200 basis points drop in the one-year mortgage interest rate over the past year could reduce monthly mortgage minimum repayments by $800 a month. If the FBH lives in Auckland, that fall in interest costs could be about $1,000a month. The savings are equivalent to about 7% of the average first home buyer’s household income.

While lower borrowing costs are helping boost affordability there are some big differences around the country.

Higher prices in Auckland mean mortgage interest costs make up about 40% of some buyers’ income, well above the nationwide average of 33%. At the other end of the spectrum in some central North Island centres, such as Taranaki and Wanganui, spending on interest costs make up about 20-25% of the average FHB’s income. 

Age creeps up

Analysis by Cotality and Westpac found that the average age of first home buyers in New Zealand is rising, with new data showing Auckland buyers now average 37 years old, 36 in Wellington, and 35 in Christchurch — each about two to three years older than in 2019.

“This shift partly reflects conscious lifestyle choices — such as travel, building careers, or starting families” Davidson says. 

FHBs are also now more likely to already have children when they buy a home than in the past.

That can have important implications for the type, size and locations of homes they choose, as well as the time it takes to repay any borrowing.

The fall in borrowing costs hasn’t just been a boon for first home buyers. There has also been increased demand from other owner occupiers and investors, although investors remain a smaller presence than they were before the pandemic, with slow rental growth and more modest capital gains than in the past acting as a brake on demand.

The wider Wellington area remains buoyant for FHBs, where they have accounted for 36% of the market activity so far this year, about 7% above normal. Hamilton sits at 30% - about 6% above normal, with Dunedin at 28%, Auckland 27% and Christchurch 26%. Tauranga sits further back with a market share for FHBs of 21%, about 4% higher than its own average.

Deposit avenues

Helping FHBs get into the market has been their ability to use their KiwiSaver towards a deposit.

The number of first home withdrawals have been trending higher since 2023 and that is in part because amount of funds in KiwiSaver are also higher, Ranchhod says.

FHBs have also been helped by access to low deposit finance through banks’ loan-to value ratio speed limits. Banks can lend 20% of their total to buyers with less than a 20% deposit and FHBs have taken advantage of this making full use of the lending allowances. 
Challenges ahead
Although FHBs continue to face challenges in the housing market they are likely to buy more properties this year than last.
Davidson and Ranchhod expect the muted property market upturn to continue, with sales volumes rising from about 82,000 last year to about 92,000 this year and values nationally rising about 5%.
The sluggish environment means FHBs can take their time and try to secure a discounted property or perhaps buy a better/bigger house for the same money, Davidson says.
FHBs thinking about buying should look at the overall picture, Ranchhod says. 
Rents are not going up, giving renters more time to save a bigger deposit, but on the other hand house prices are going up slowly, while wage growth is cooling, and interest rates could be near the end of the easing cycle, with not much potential for more big drops.
He says potential buyers should discuss with a mortgage adviser what their best strategy will be. Good advice is key.