Investors target bargains as first-home buyers surge
Cotality’s latest Buyer Classification data for June revealed a solid second quarter for first-home buyers (FHBs) and an encouraging rebound from “mum and dad” investors, who are now favouring cheaper, existing properties as affordability improves slightly, and mortgage top-ups shrink.
The update comes as new REINZ figures show the national median price held steady at $770,000 in June, with sales volumes rising more than 20% year-on-year and listings dipping. Market activity remains cautious overall, but price stability and more choice are giving buyers room to act.
First-home buyers maintain record-level market share
FHBs accounted for just over 26% of property purchases nationwide in Q2, continuing to operate at or near record highs, particularly in main centres.
In Q2, first-home buyers made up 27% of purchases in both Christchurch and Dunedin, 29% in Auckland, 32% in Hamilton, and a higher 36% across the wider Wellington region.
FHB demand is being supported by:
- KiwiSaver withdrawals for deposits
- Access to low-deposit lending under current LVR settings
- National property values still 16% below their peak
“The fact that property values nationally remain 16% below the peak is an extra factor in buyers’ favour at present, as is the still-strong desire to ‘get on the ladder’ despite mortgage costs typically being higher than rents,” Cotality said.
It also noted that FHB activity is rising in absolute terms as more properties are being sold across the country.
Smaller investors drive the mortgaged MPO rebound
Mortgaged multiple property owners (MPOs), including investors, made up around 23% of purchases in Q2 – up from the 21% trough seen mid-2024 but still below the long-run average of 25%.
“Among the main centres, Auckland and Christchurch saw 26% of activity go to mortgaged MPOs in Q2, with Hamilton a little higher again at 27%.”
Much of the recovery is being led by smaller-scale investors. Investors with portfolios of up to four properties, including their own home, have increased their market share from 12% to 14%.
Investors shift focus to cheaper, existing stock
Cotality’s data showed a clear trend toward affordability. Mortgaged investors are increasingly targeting lower-priced homes, with their share of purchases in the bottom 30% of property values rising from 21% in 2024 to 24% in 2025.
A similar pattern is emerging in the preference for existing homes over new builds. They’ve accounted for 23% of existing home purchases in 2025 to date, up from 20% in 2024.
Key drivers of this trend include:
- Restoration of mortgage interest deductibility, levelling the tax playing field between new and existing properties
- Higher listing volumes, providing bargain opportunities in the lower price brackets
- Improving yields on lower-value stock
“An abundance of listings on the market probably also means some savvy investors can pick up ‘bargains’ in the lower price brackets, potentially with higher rental yields.”
Lower mortgage top-ups improve cashflow
Mortgage rate declines over the past year have reduced weekly top-up requirements for investors.
In the past year, typical weekly top-ups have dropped from around $400-$500 to approximately $200.
This cashflow improvement is helping broaden the appeal of property investment – particularly for everyday “mum and dad” investors.
Lower mortgage rates are making property investment more attractive to a broader range of ‘Mum and Dad’ buyers, as they reduce the cashflow top-ups usually needed from other income to support a rental purchase.
Headwinds still present for investors
Despite the momentum, it’s not all smooth sailing for mortgaged investors.
“Rents have generally gone flat lately, even dipping in key markets such as Auckland and Wellington,” Cotality said. “Costs such as council rates continue to rise, and the debt-to-income ratio rules for mortgage lending might just be starting to bite for some would-be investors.”
Movers could be next to re-engage
While FHBs and investors are likely to remain active in coming quarters, Cotality suggests owner-occupier movers could be a group to watch.
“Movers (i.e. relocating owner occupiers) could be worth watching, given that they’ve been relatively quiet in recent years yet changes in household circumstances such as births, marriages, job shifts are always happening,” it said.
With listings high and prices off-peak, movers may begin to view current conditions more favourably.
“A sluggish market can be an ideal time to do so,” Cotality said.
