NZ Property Market: First Home Buyers and Investors Return Despite High Rates

New Zealand’s housing market has transitioned into a buyers’ market, characterized by a combination of abundant listings, negligible price growth, and plentiful credit that has specifically benefited first-home buyers.

According to data from the Reserve Bank, first-home buyer activity has steadily increased since early 2022. In December 2025, new mortgages to first-home buyers reached a record high of 3,597, which was 7.5% above the previous peak recorded in March 2021.

The share of new mortgages held by first-home buyers, which stood at 25% in 2021, rose to nearly 40% in mid-2023 and remained around 34% for most of 2025.

Affordability and Lending Shifts

The surge in first-home buyer activity is attributed to simultaneous improvements in deposit affordability and mortgage serviceability. Between December 2023 and March 2026, deposit affordability improved by 11%, while the ability to afford mortgage repayments improved by 70%.

Lending criteria have also shifted. High loan-to-value ratio (LVR) lending to first-home buyers increased from approximately 35% in 2023 to roughly 50% by March 2026, meaning nearly half of first-home buyers are purchasing properties without a traditional 20% deposit.

Investor Market Dynamics

The role of property investors in the current market remains a point of divergence among analysts. Corelogic’s buyer classification data indicates that investors increased their share of property purchases to 23% in the first quarter of 2026, up from 20% earlier in 2025.

Corelogic chief property economist Kelvin Davidson noted that the return of home loan interest deductibility, lower mortgage rates, and reduced LVR restrictions have encouraged investors. This comeback has been largely powered by mums and dads with a single investment property, who grew from 6% of activity in mid-2023 to 8% in the first quarter of 2026.

Davidson also observed a shift away from new builds, with investor activity in that segment dropping from 30% in 2023 to 27%. He stated that older properties no longer carry higher tax bills than new builds due to changes in interest deductibility.

However, other reports suggest a broader retreat by investors. A survey of 322 licensed real estate agents conducted by economist Tony Alexander, published March 6, 2026, found that more investors are looking to sell than buy. The report indicated that while first-home buyers remain highly present, investors are pulling back.

Pricing and Market Sentiment

Market sentiment has cooled significantly following a flurry of activity in late 2025. The proportion of real estate agents observing a fear of missing out (FOMO) among buyers dropped from 26% in late 2025 to 13% by March 6, 2026.

Property prices have reached a stalemate. The NZHL Property Report found that a net 2% of agents feel prices are falling in their area, a figure Tony Alexander described as essentially the same statistically as saying as many agents see prices rising as see them falling.

This lack of price growth has shifted the balance of power toward buyers. Agents reported that buyers no longer feel a need to rush into decisions and are increasingly willing to walk away from deals if vendors are reluctant to negotiate to meet the market.

Activity at auctions and open homes has also declined. The net share of agents reporting more open-home attendees fell from 55% to 23% between February and March 2026, while the net percentage of agents reporting more people at auctions dropped from 19% to 11% in the same period.