Flat prices and easing mortgage rates boost buyer confidence
Housing affordability has improved to its best level in more than four years, giving first-home buyers across New Zealand a long-awaited opportunity to enter the market, according to interest.co.nz.
A mix of stable prices, lower mortgage rates, and gradually rising incomes has made ownership more attainable at the lower end of the market.
Lower-quartile prices stabilise across the country
According to the Real Estate Institute of New Zealand (REINZ), the national lower quartile selling price was $590,000 in September, representing the 25th percentile of all sales.
That’s $80,000 below the 2021 peak of $670,000, but prices have hovered in a tight band between $580,000 and $599,000 over the past six months – a sign the entry-level market has found its footing.
Falling mortgage rates lift affordability
The average two-year fixed mortgage rate from major banks fell to 4.72% in September, down from 7.04% in late 2023 – the lowest since March 2022.
At today’s rates, a typical lower-quartile home with a 10% deposit costs about $728 a week in mortgage payments, compared with $935 a week at the peak in 2023.
“It’s now at its lowest level since October 2021,” interest.co.nz said.
Incomes rise, improving buying power
A typical first-home-buyer couple aged 25 to 29 now takes home about $2,208 a week after tax, up 3.9% year-on-year.
Combined with easing mortgage costs, the average repayment on a lower-quartile property now consumes just one-third of after-tax income – the most affordable level since June 2021.
Mortgage payments are deemed “unaffordable” when they exceed 40% of take-home pay, meaning homeownership is once again within reach for many first-home buyers nationwide, according to interest.co.nz.
Regional affordability gaps remain
Some regions remain out of reach. interest.co.nz found that Auckland, Tauranga, and Queenstown are still unaffordable for first-home buyers with a 10% deposit.
However, within Auckland, Waitakere, Franklin, and Papakura districts are borderline affordable, with payments hovering around 40% of household income.
With a 20% deposit, only Queenstown remains outside affordability thresholds.
Deposit barrier eases
The deposit challenge, while still significant, has become slightly easier.
A 10% deposit on a lower-quartile home now sits at $59,000, down from $67,000 in 2021.
At current income levels, saving that amount would take around 2.6 years for a couple putting aside 20% of their after-tax income, compared with 3.7 years four years ago.
“That’s still no mean feat,” interest.co.nz said, “but then getting the wherewithal together to buy a first home has never been easy. Perhaps surprisingly, it has been getting easier over the last four years.”
Key takeaway for advisers
For mortgage advisers, these figures point to a resurgent first-home-buyer market.
With stable prices, easing rates, and looser LVR settings supporting demand, advisers should prepare for a wave of renewed buyer activity through 2026.
Helping clients lock in competitive fixed rates early and navigate government deposit assistance schemes could prove crucial as affordability reaches its most favourable levels since 2021.
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