Advisers see best entry point in years for FHBs

Investor drop-off, stable prices and lower rates have made it an excellent time to be a first-home buyer

Advisers see best entry point in years for FHBs

First-home buyers are seeing the most favourable environment in years. Strong listing volumes, stabilising prices and lowering interest rates have created a rare moment of leverage and choice, with ANZ’s May 2025 Property Focus report revealing inventories sitting at near-decade highs. 

The report shows national house prices edging up just 0.4% in April, and days to sell are nudging down. It notes that prices are expected to lift more meaningfully in the second half of the year – however, this is still likely to be tempered by “ample supply.” 

David Cunningham, chief squirrel at Squirrel, said that it is currently a “Goldilocks time” for first-home buyers, as house prices are relatively stable. 

“There’s a load of homes on the market, so FHBs can take their time and be choosy,” Cunningham told NZ Adviser.  

“Prices have fallen around 15% from their peak and feel in the ‘reasonable price’ zone. New builds are more expensive than existing homes, though given that many FHBs take to the paintbrush, saw and hammer, buying an existing home and doing it up is often part of the FHB journey.” 

Buyers are also increasingly favouring standalone homes, and aren’t having to compromise on buying flats or apartments. According to Cunningham, 75% of first-home buyers are now purchasing houses, a move that reflects both lifestyle preferences and increased access.  

“This is perfect for starting and growing a family, as well as the do-up culture of younger New Zealanders,” he said. 

That preference is being made possible by another key factor: a drop-off in investor competition. The slowdown in landlord activity is giving first-home buyers clearer access to stock, with ANZ’s Property Focus highlighting a sharp cooling in rental inflation, which has plunged to 0% for new tenancies – the lowest level in 15 years.  

The report said this is due to a combination of reduced migration, soft household income growth, and new supply from post-COVID builds hitting the market. This tenant-friendly backdrop is giving first-home buyers a clear run at properties without the usual competition from yield-hunting investors. 

Elyce Peters, founder and head adviser at The Mortgage Girls, said buyers are using that breathing room to secure better purchase terms. 

“For many clients, this is opening up opportunities to upsize or purchase with subject-to-sale clauses – a luxury that was almost non-existent during peak competition phases,” Peters said. “Sellers remain motivated and buyers who have their pre-approvals lined up are in an excellent position to secure favourable terms and conditions.” 

Flexible mortgage structuring gains popularity 

Meanwhile, mortgage structuring is evolving as clients look to balance short-term savings with longer-term certainty. Peters said many are now blending loan terms to straddle both fronts. 

“Right now, many buyers we’re working with are opting for blended solutions, typically splitting their borrowing between a short six-month rate and a one- to three-year fixed portion,” she said. 

“This approach allows them to achieve immediate savings while also locking in some stability for peace of mind as they settle into homeownership. Appetite for longer four-plus-year terms remains minimal. Clients are watching the market closely and prioritising flexibility.” 

This matches ANZ’s observations, which show the mortgage curve remains “tick-shaped,” with one- and two-year fixed rates forming the trough. According to the report, current fixed rates from major banks are clustered between 5.29% and 5.69%, with the special one- and two-year rates sitting lower at around 4.99%. 

But while short-term rates are competitive, not all borrowers are hedging their bets. Some, particularly those who’ve adapted to higher repayments, are leaning into short fixes to take full advantage of potential rate drops. 

“A growing number are now more comfortable taking on additional risk – choosing six-month fixed terms across their full lending,” Peters said. “They’re aiming to benefit from potential rate drops as they flow through.” 

ANZ expects the Official Cash Rate to fall from 3.25% to 2.5% by October, with mortgage rates likely to follow, albeit marginally. It notes that most of the expected movement is already priced into wholesale interest rates, and that fixed mortgage rates may only dip another 10-20 basis points from here. 

Cunningham sees that playing out already in borrower behaviour. 

“The best interest rates are around the 2 to 3-year term,” he said. “Over the last few months, borrowers have moved from favouring six- and 12-month terms to two-year terms at around 4.99%. However, with three-year rates now below 5%, that term will likely see a pickup too. 

“Mortgage rates are approaching their lows,” he said. “There could be up to 75bp of OCR cuts, but that’s by no means a given.  Wholesale interest rates, on which fixed home loan rates are dependent, already reflect another 25bp OCR cut, so it would take an OCR below 3% to get a meaningful move down in 1-3 year mortgage rates.  So while it is possible that 1-2 year rates could push down towards 4.5% in 2025, the 4.95% rates on offer provide certainty and are, historically, ‘in the zone’.”