FHBs surge while OCR cut still expected
First-home buyers are dominating New Zealand’s housing market, supported by deposit assistance and soft prices, while mortgaged investors begin a quiet comeback.
Meanwhile, sales volumes are rising, and economists are watching closely for inflation and lending data that could shift the outlook for interest rates, according to Kelvin Davidson (pictured), Cotality chief economist.
First-home buyers thrive as prices stay 16% below peak
“First-home buyers are still reaping the benefits of a housing market that's weighted in their favour. Supported by KiwiSaver, low-deposit loans, and prices that are 16% below peak...” Davidson wrote for OneRoof.
Regional FHB activity was even stronger:
- Christchurch and Dunedin: 27%
- Auckland: 29%
- Hamilton: 32%
- Wider Wellington region: 36%
Movers—relocating owner-occupiers—were “quieter than usual, but remain a group to watch,” Davidson noted. He suggested household changes such as births, marriages, and job shifts could drive latent demand, especially with current listing volumes.
‘Mum and Dad’ investors return to cheaper stock
Davidson pointed to a steady investor resurgence, particularly among smaller, mortgaged landlords.
“In the past six to nine months, mortgaged investors have been making a steady comeback, especially the cliched ‘mums and dads’ who are looking at the cheaper end of the market and potentially existing properties (now that their tax disadvantages compared to new-builds have been removed),” he said.
While many headwinds persist—such as rising insurance, maintenance costs and flat rents—falling mortgage rates have improved cashflow and reduced the typical cash top-ups investors need to service loans.
Property sales rise 25%, but from a low base
Market activity is also gaining ground, with more than 7,000 property transactions recorded in June, up 25% year-on-year.
“This was the 25th rise in the past 26 months,” Davidson said, though he cautioned that sales are only now returning to normal after a deep trough in 2022–23.
That gradual recovery could eventually put upward pressure on prices as listing stock begins to erode, but Davidson suggested it would likely be a slow process.
Economy remains mixed as OCR cut expected
“Just a quick look at the economic stats from last week, nothing much really changed,” Davidson said, referencing weak services sector data and patchy consumer spending. “It supports the view that the OCR will probably need to be cut again, at least once.”
Inflation lifts to 2.7%, but not enough to rule out a cut
Ahead of the Q2 CPI release, Davidson flagged a potential risk for rate cut timing.
“The problem on that front for the Reserve Bank is a recent concerning shift in consumer prices for items such as food and energy,” he said.
“The RBNZ anticipates an inflation figure of 2.6%, only slightly up from Q1’s 2.5%... But something pushing up towards 3% may just scale back the chances of an OCR cut in August.”
The actual result came in at 2.7%, slightly above the RBNZ’s forecast, but in line with its policy expectations. Economists including Westpac and ASB say the data is unlikely to derail plans for a 25bps OCR cut in August, as underlying inflation remains well contained.
Lending trends and DTIs in focus
“The other release to watch this week will be June’s mortgage lending figures from the RBNZ,” Davidson wrote.
He pointed to interest-only lending, high-LVR lending, and debt-to-income (DTI) ratios as key indicators brokers should watch closely—particularly as lending conditions evolve alongside rate expectations.
Get the hottest and freshest mortgage news delivered right into your inbox. Subscribe now to our FREE daily newsletter.
