First home buyers make the most of quiet market

Monday, 13 October 2025

Times might be quiet in the housing market, but that’s not putting first home buyers off. They took out a quarter of new home loans in the first half of this year.

The New Zealand Banking Association has released its latest retail banking insights, and they show that of the 60,249 new home loans opened from January to June this year, 25% were for first home buyers.

That continued a trend seen in the previous six months, but the average home loan value for first home buyers was up 3% on the previous period to $507,690.

Roger Beaumont, the association’s chief executive, said it was great to see first home buyers taking advantage of the current property market and getting into their first home.

But first home buyers dominance in the market is not a new trend, with Cotality’s buyer classification data showing their market share has been at historically high levels for the last couple of years.

Cotality chief property economist Kelvin Davidson said first home buyers' market share of purchases has been sitting around 26% to 27% since early 2024.

First home buyers at record levels

“But we’ve just got our September numbers, and for that month their market share hit 28%, which is a new record for a month.”

The reason first home buyers continued to have such a strong presence was due to a combination of factors, he said.

“House prices are down - that helps. Interest rates are down - that helps. And we are seeing more and more KiwiSaver withdrawals as balances get bigger and people can go further on a deposit.

“Banks are also allowing more and more first home buyers to enter the market with a less than 20% deposit.”

The latest Reserve Bank lending statistics showed that 50% of loans with a lower than 20% deposit went to first home buyers in August, he said.

“That’s a new record too, and it shows first home buyers are monopolising the banks’ LVR allowance. And then you have to add in the willingness to buy to get on the property ladder.

“Achieving security of tenure is a big driver. It means buying a property is not a discretionary purchase for first home buyers, as it is for investors.”

There was also now a greater range of stock and property types, especially in Auckland, and that was helpful to first home buyers too, Davidson added.

“Looking ahead, as market activity rises, first home buyers' share of purchases might fall and yet they might still be responsible for a higher number of deals.

“But it’s unlikely for their market share to change that much as the same factors are likely to be at play for the foreseeable future. House prices might lift a bit but they are not likely to race away.”

He said more investors, particularly smaller scale investors, were starting to come back to the market, but it did not have to be either or as both buyer groups were needed.

Home loan activity on the rise

Meanwhile, the banking association’s data insights showed the total number of new home loans was up 5.8% over the first half of the year, compared to the previous six months.

There was a total of 1.4 million home loans across 1.2 million customers at the end of June, and the average loan value was $329,656, up 2%.

About 40.3% of home loan customers were paying more than their minimum repayments, up from 39.4% in the previous six months.

But 1.5% of customers were behind on their home loan repayments, a 0.1% decrease.

Of all banking customers, 6515 applied for hardship status, a decrease of 26% compared to the previous six months.

The data also showed 12,555 home loans were switched from principal and interest to interest-only repayments, a decrease of 28%, and that customers continued to prefer fixed interest rates at 57.3% of all home loans.

Beaumont said that despite the challenging economic conditions, most customers were continuing to manage their money well.