FHB purchases are at a record high as serviceability substantially improves
First home buyers have captured their highest-ever share of New Zealand's property market, accounting for 27.7% of purchases in the September quarter.
The latest Cotality-Westpac NZ First Home Buyer Report shows first home buyer purchases at a record high, up from the previous record of 26.9% in the December 2024 quarter. This has been driven largely by falling mortgage rates and better affordability.
In absolute terms, first-home buyers are also purchasing more properties as the overall market becomes busier.
Wellington has emerged as the strongest market for first-home buyers, making up 36% of property purchases across Wellington City, Lower Hutt, Upper Hutt and Porirua in the first nine months of 2025. Rotorua recorded 32% first home buyer activity, while South Waikato and Timaru both reached 28%.
Westpac lending data shows loans to first-home buyers are at their highest level in more than three years. The national average loan-to-value ratio for first-home buyers currently sits at 79%, up from less than 75% three years ago.
Rate cuts deliver $485 monthly saving
Mortgage rate declines have substantially improved serviceability for this group. One-year fixed mortgage rates are nearly 150 basis points lower than a year ago, while two-year fixed rates have fallen around 250 basis points since 2023.
Westpac senior economist Satish Ranchhod said the fall in the one-year mortgage rate over the past year had reduced the average first home buyer's monthly minimum mortgage payments by approximately $485.
"That's a saving equivalent to 4-5% of the average first home buyer's monthly income, based on the median price of $700,000," he said.
The median price paid by first-home buyers in 2025 is $700,000, marginally above $695,000 in 2024. This remains below the overall market median of $770,000 but significantly higher than the lower quartile price of $585,000 across all buyers.
Cotality chief property economist Kelvin Davidson said first home buyers are not necessarily entering at the bottom of the market. "The typical first home buyer doesn't always enter at the bottom of the market and work their way up, many enter the market well above the bottom rung of the ladder."
First-home buyer activity increases across all price brackets
In the bottom 30% of the market by value, first-home buyer share rose from 26% in 2015 to 33% in 2020 and now stands at 35%. Similar upward trends appear in the middle 40% and top 30% value brackets.
The average age of a first-home buyer has risen to 36 years nationally, up from around 34 years before COVID-19. Davidson said this partly reflects conscious choices such as overseas experience or establishing careers, but also indicates affordability pressures forcing some buyers to enter the market later.
Commenting on lending trends, Ranchhod told NZ Adviser that longer-term fixed rates are slowly gaining popularity as they reach attractive levels – however, the bulk of lending is still going to the shorter-term fixes.
"Looking across all borrowers, fixed mortgages for terms of six months to one year have been the most popular. But the two year term is starting to see growing popularity,” he said.
He noted that with more buyers in the market, competition among banks for home loan customers has also intensified.
"Banks are undercutting each other on home loans all the time, sometimes on a weekly basis," he said.
The Reserve Bank is expected to cut the official cash rate by 25 basis points at its 26 November meeting. LVR spend limits are set to ease from 1 December, which Ranchhod said would make the market more accessible, though it’s hard to estimate how many additional first-home buyers this might attract.
Even if interest rates stabilise, Ranchhod expects first-home buyer numbers to continue rising.
"Earlier interest rate cuts are still working their way through the economy and growth is expected to gradually firm over the coming year,” he explained. “That will help to support a further rise in first home buyer numbers."
