Lower debt costs keep first-home buyers in control despite looming OCR hikes
First-home buyers continue to anchor New Zealand’s housing activity, with the latest Cotality–Westpac First Home Buyer Report showing they made up 27.5% of all purchases in Q1 2026, just below the 28.2% record set late last year.
Over the past 12 months they have bought around 24,800 properties, the highest annual tally since Q3 2021, even as overall sales volumes remain subdued and listing stock elevated.
Cotality chief property economist Kelvin Davidson (pictured left) said softer prices and cheaper debt had underpinned demand.
“Lower property values and reduced mortgage costs have made a real difference, and we’re seeing that translate directly into activity,” Davidson said.
Standalone houses accounted for nearly 77% of first-home buyer purchases in early 2026, up from 75% in 2025 and the highest share since 2020.
Although the median price paid by first-home buyers has climbed to $720,000 this year, from about $700,000 in 2025, it remains below the Q1 2022 peak of $740,000. Many are buying well above the bottom of the market, with typical purchases sitting above the all‑buyer lower‑quartile price of $600,000.
“It shows that a first-time buyer doesn’t always enter at the bottom of the market and work their way up, many actually enter the market well above the lowest tiers of the ladder,” Davidson said.
High-LVR loans and younger buyers support demand
Reserve Bank figures show more than half of recent first-home buyer loans have been written with deposits under 20%, and Westpac’s books indicate the average LVR has risen to about 81% over the past year, from below 77% in 2024.
The average buyer age has edged down from 36 to around 35, with Auckland sitting closer to 37, while lower‑priced regions such as Taranaki and Southland attract younger entrants. That strength is evident across the main centres, where first-home buyer market share is above long‑run norms.
In wider Wellington, first-home buyers accounted for 37% of purchases in Q1 2026, roughly eight percentage points above average, with Hamilton at 33% and Auckland at 30%. In the main urban areas, Napier led on 31%, while Gisborne and Palmerston North also exceeded 30%.
Affordability gains face pressure from rising mortgage rates
Improved borrowing capacity has been reinforced by lower servicing costs. Outside Auckland, minimum repayments on a typical first-home loan are estimated to be about $130 per month lower than a year ago and roughly $820 below 2024 levels. In Auckland, the monthly saving is around $180 versus a year earlier and about $1,100 compared with 2024.
Westpac senior economist Satish Ranchhod (pictured right) said rate cuts had been pivotal.
“The falls in the OCR over the past year have been especially important for the property market and have made it meaningfully easier for first home buyers to get a foot on the ladder,” Ranchhod said.
However, he warned that higher oil prices and resurgent inflation mean the Reserve Bank is expected to begin lifting the OCR from September, with fixed mortgage rates already moving off their recent lows.
Even so, Westpac forecasts house prices will fall only around 1% in 2026, with a gradual return to more moderate growth beyond that. Even if first-home buyers’ share eases as other groups, including relocating owner‑occupiers and property investors, return to the market, they are still likely to complete a high number of purchases in absolute terms.
Access the full Cotality-Westpac report here.
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