Should you buy your first home now, or keep renting? Three economists weigh in

Monday, 6 July 2026

Gill South is a personal finance writer.

ANALYSIS: With rents falling, house prices pretty soft, and the prospect of interest rates going up later this year, it’s not surprising that potential first home buyers are weighing up the whole buying vs renting equation once again.

Reader Marina* and her partner Brett *are considering buying their first home together. She asks:

“I have pre-approval to buy a home worth up to 900k in Hawke’s Bay, I am a first home buyer and would be clearing out my KiwiSaver with my partner. We are both 32 and we don't have any children yet but we would like to have a baby in the next couple of years.

My question is with everything happening in the world with Iran and the election and everything getting so expensive - and no one saying property is going to go up by heaps anytime soon - would we actually be better off just renting and seeing what happens?

But if we wait too long and interest rates head up and are higher in a year’s time, I am so confused. How can we decide?”

Infometrics CEO Brad Olsen, despite his fancy title, still rents in Wellington because it’s convenient, but he understands one of the big advantages owning has over renting is security of tenure.

When you’re a student or a younger renter with a “rambunctious group of people,” it’s almost a given that you’ll move every year or too but that’s not so appealing when you settle down with a partner, he says.

“On the other hand, one of the lovely things about being a tenant is if something goes wrong, it’s not my problem,” says Brad.

Renting works well when you aren’t ready to put down roots, wanting to be more flexible and mobile, he adds.

Would Marina and Brett be better off financially renting than owning? There might be a financial argument for renting and investing in the share market, says Brad but he suspects that this won’t be a key driver for them if they are planning to start a family.

“If you really come down to it, bluntly, having children is probably not the best financial decision,” says the economist. “But that’s not why people have kids – and so the pure financials mightn’t be the key reason someone buys or not,” he says.

The assumption that your house will double in value every 10 years, is no longer a sure thing in NZ. If Marina and Brett are looking for a safe, healthy comfortable home for the long term to raise a family, then they shouldn’t be too worried about house prices going up massively, Brad says.

If you have a property question or story, submit it in our Google form below.

Another thing for Marina to consider is that Hawke’s Bay isn’t a very well supplied rental market, where you can easily hop from ideal house to ideal house.

House values in Hawke’s Bay have gone down 1.6% on a year ago, compared to the 0.8% national average, while rents are only down 0.5% from a year ago, compared with the national average which is down 1.2%, according to Infometrics figures based on Cotality and MBIE data.

As for rising interest rates, Brad suggests Marina and Brett run some scenarios on how increased rates would cut into their lifestyle with a good mortgage adviser.

Shamubeel Eaqub, chief economist at Simplicity and author of “Generation Rent: rethinking New Zealand’s priorities,” has experienced the advantages of home ownership.

As the father of two boys, Shamubeel says before they’ve had children, people might not understand that a sudden move out of the area, precipitated by the landlord changing plans, can be traumatising for children.

As well as stability and continuity for family, of which education is a really big part, it’s also about being part of a community, he says.

“All of these things are much easier as a homeowner than as a renter because in New Zealand renting is not secure, and it’s not long term,” says the economist, who notes that a third of households rent and two thirds own in New Zealand.

Meanwhile never go to the maximum in terms of debt, says Shamubeel. Take on debt that you could afford even if one of you lost your job or chose not to work, he says.

“Because your home should be a source of security, not a source of stress.”

Independent economist, Cameron Bagrie thinks first home buyers like Marina and Brett should understand that the housing market is going through a structural adjustment.

“Phase one was the realisation that, what goes a hell of a long way up has got the potential to come back down, a long way on the other side,” he says. House prices since the post-Covid boom are down across the country by 15 or 20%.

The second phase is the fact that there’s a different interest rate world out there now, with interest rates neither high nor low.

“But people have seen that interest rates can move up so I think they’re a little bit more gun shy,” says Cameron.

For property investors, this makes it harder to make the numbers work, which clears the field for first home buyers. With ample housing supply to choose from, the conditions are pretty good for Marina and Brett.

But buying a home is a personal choice. In Cameron’s own experience he has always bought homes that aren’t a finished product, that he can add value to.

Hope that helps, Marina and Brett. A lot to mull over and you’re lucky to have options.

*not their real names

If you have a property question or story, submit it in our Google form below.