First home buyers take the lead

New Zealand’s housing market closed out 2025 with a clear shift in who’s driving the action and while national property values tracked broadly flat, first home buyers quietly strengthened their foothold, now claiming a record share of completed purchases. With lower home loan rates, greater use of KiwiSaver funds, and access to banks’ low-deposit lending allowances improving affordability, many aspiring homeowners are finding the leap from renting to owning more achievable – and in some cases, no more expensive than staying put.

Cotality Chief Economist Kelvin Davidson says not only have first home buyers had a rising market share, but it's a rising market share in a busier market.

“They had a market share of 28.4% in the final quarter of last year which is a record high.”

Davidson says a big driver behind that has been favourable conditions for that part of the market.

“That includes taking advantage of lower house prices, lower interest rates, and using their KiwiSaver for part of their deposit.”

Then there’s also the ability to borrow with a much lower deposit.

“There's this perception that people need a 20% deposit to get into the market, but that’s not the case. The banks have money to lend, and they're very happy to lend with a lower deposit. They have an allowance to lend at less than 20% and first home buyers are definitely taking advantage of that.”

“According to the latest data about half of all first home buyer loans are done at less than 20% deposit. So, people are getting in with 10% or 15% and that’s a big contributing factor to the increase in their activity.”

Davidson says in many cases it also works out to be cheaper for people to pay off a mortgage instead of paying for their rent.

“If you simply look at how much they’re paying in rent versus a mortgage without some of the extra costs then in a lot of cases the mortgage could be cheaper, so people will be pretty keen to explore that option.”

Despite the cyclical nature of the property market, Davidson expects the momentum of first home buyers to continue for some time.

“In the past, first home buyers were often set back by a downturn followed by a rapid price rebound, which left them behind while saving for a deposit. I think that risk is now reduced.”

“Yes, we might see a bit of house price growth this year, and it does feel like things are turning around. But are people going to find their deposits rapidly shrinking in relation to house prices? Probably not, because now even a 5% increase in house prices this year would still be pretty modest.”

INVESTORS:

While first home buyers dominated late‑2025 activity, Davidson says the broader buyer landscape was more uneven.

Mortgaged multiple property owners made up 24.6% of the market, and cash multiple property owners made up 10.7%.

Mortgaged MPOs typically average around a 24 - 25% market share with the latest numbers coming off the back of a period of quieter activity.

“Through 2022/2023 the tax rules were shifting against property investors with the previous government and mortgage rates were still pretty high.”

“Since then, we had the change of government and bright line tests were shortened as well as mortgage interest deductibility being introduced which all helps.”

The one thing he says had the biggest impact is lower interest rates.

“Most people do tend to have to put in some extra cash on a new rental purchase, and if you go back to where mortgage rates were 7%, those top ups might have been $500 a week on average - so very difficult for a mum and dad to make that work.”

“But now, with lower interest rates that might be more like $150 to $200. It’s still a chunk of cash, but it's a lot more achievable.”

Davidson says 2026 brings a lot of factors to look out for with investors.

“It’s an election year, so we’re definitely going to see a discussion about a capital gains tax, and we're probably going to see a discussion about interest deductibility too.”

“Rents are also flat to falling, so that's an extra challenge. Council rates are going up too, as is home insurance - so the operational cost of owning a property is increasing. Debt to income ratio restrictions are also lurking around in the background.”

Davidson believes all of this will force many investors to think twice about their investments.

"They'll be asking questions like - am I still keen to invest in property and accept a lower return? Or do I need to change the way I invest in property to keep the same return? Do I need to look at different property types that deliver higher yields, or do I look at other assets altogether?”

So, if investors are considering downsizing their investments to the lower value properties, will that mean more competition for first home buyers?

“There will be markets and segments where those two groups are competing. But you actually need first time buyers and investors.”

“There are of course advantages of having first time buyers in the market, but you also need investors, because people need to rent property too.”

MOVERS:

Relocating owner‑occupiers, or ‘movers’, remained quieter than usual, taking a dip to 24.9% of the market share.

“We've done some work lately looking at why that's the case, and you can see a pretty good correlation through time that when mover activity is relatively low, it tends to coincide with soft patches in the economy.”

“The real world explanation for that would likely be down to job security. If you keep your job, but you're not necessarily that secure in it, you're probably not going to rush out, trade up, move house, incur all those costs and potentially take on more debt as well.”

Another factor Davidson believes could be playing into it is around confidence in the property market too. “People have maybe been reluctant to buy before they sell and want to make damn sure they can sell their own property before committing to something else.”

“That would most likely slow down housing chains.”

But that’s not to say that all activity has flattened and for the long term.

“Life is still happening and family situations change. You'd think there's going to be some sort of activity stored up there ready to go, if and when the economy turns around.”

Based on that, Davidson says that movers will likely be the buyer group to watch as we move deeper into 2026. “Because they've been quiet for a while, if confidence turns around and sentiment turns around, then we could see a bit more of that mover activity.”

THE OTHERS:

As for the other buyer groups that included new-to-market, re-entry to market and other.

New-to-market buyers made up 4.8%, those who re-entered delivered 5% of activity and other buyers were 1.6%.

As for his 2026 predictions Davidson suggests that first home buyer activity could decrease.

“I also believe that the movers will increase as the economy turns around. Ultimately activity only adds up to 100% and someone has to fall, so I wonder if it is first time buyers.

“At least they've been really active for a while.”