First-home buyers given green light amid rare market conditions
First-home buyers in New Zealand are being told it could be their best shot yet to get onto the property ladder.
Property data firm QV said a dip in values had created a “rare opportunity” for new buyers. Real Estate Institute acting chief executive Rowan Dixon echoed that view, pointing to favourable conditions.
“There is still plenty of stock there, particularly in the main centres, good pricing and low interest rates… if people can get into the market for their first home now is a good time to do it before maybe things start to pick up a bit more,” Dixon said.
Falling interest rates ease the burden — but only slightly
Interest rates have dropped significantly in recent months, making mortgage repayments more manageable.
Two-year fixed rates have fallen from around 7% to 5%, which could mean weekly repayments of about $700 on a typical first-home loan of $567,448. That’s still roughly $60 more than the national average rent.
Kelvin Davidson (pictured left), CoreLogic chief property economist, noted this drop hasn’t yet caused the usual surge in house prices.
“There’s a window where financing is cheaper, but it hasn’t quite flowed through to house prices as it might have done historically,” Davidson said.
House prices lower but unlikely to fall much further
House prices remain about 15% below their peak nationally. Wellington is still more than 25% down, and Auckland 21.6%. But compared to five years ago, house prices are only slightly higher: just 2.2% in Auckland and 1.5% in Wellington.
“Houses are more affordable than they were,” Davidson said. “I still wouldn’t say they are affordable as such – they’re cheaper, but not necessarily cheap… There’s a sense now that they’re as cheap as they’re going to be even if they’re not necessarily cheap.”
Buyers’ market offers choice and leverage
A surge in property listings gives buyers more options and more negotiating power. Realestate.co.nz reported a 6.2% annual rise in stock for sale in April.
Brad Olsen (pictured right), Infometrics chief executive, said this dynamic gives buyers the upper hand.
“If you want to get a sale and a possible buyer knows there is probably another house for sale down the road you'll be doing a fair bit to make sure your house gets sold.”
Rental market still attractive for now
For some, renting may still be the better option in the short term. Advertised rents have dropped in many areas, and properties are taking longer to fill — except in places like Canterbury and Hawke’s Bay.
“In general terms renting is always cheaper than buying so nothing has really changed there… if you stuck to that line of argument no one would ever buy a house,” Davidson said.
“You could make a case of why rush into it when you could get a good deal on a rental for a while and you're probably not going to get left behind by the housing market in the meantime.”
Financial stability and job security still critical
While mortgage rates have eased, stable income remains crucial to homeownership. Olsen warned that the labour market remains soft.
“They might be able to afford the house at the moment but not if they lost their job and couldn’t find a new one,” he said.
It’s not just financial — it’s about timing and priorities
For some first-home buyers, the decision is driven as much by lifestyle and long-term plans as it is by financial calculations.
“In the sense that if you want to buy a house, like the house, like the location, you’re secure in your job and you want security of tenure and you can secure the finance, you’re going to be there for the long term — why wait?” Davidson said.
“There are always pros and cons but if we're asking a binary question, is it a good time to buy, yes or no, I would have to say yes.”
Olsen added a note of caution.
“Buyers definitely have a good opportunity at the moment, that is true,” he said. “But I think they should keep their wits about them… run some scenarios on what they could afford if things changed around mortgage rates or their job.”
