Low deposits and softer prices keep entry-level demand strong as rates rise
First-home buyers are bucking New Zealand’s housing slowdown, claiming a record 29.5% of property purchases in the September 2026 quarter, according to the latest Cotality Westpac First Home Buyer Report.
That surpasses the previous high of 28.3%, set just three months earlier. First-home buyer purchases are running at around 25,000 on a rolling 12-month basis, even as sales volumes among property investors and other movers have stayed flat or fallen.
Buyers getting more for their money
Entry-level buyers are compromising less. Standalone houses have made up 76% of their purchases so far in 2026, compared with about 72% across all buyers, and first-home buyers now account for around 30% of sales in the middle 40% of the market by value.
The median price they have paid this year is $715,000, up from $701,000 in 2025 but still about $4,000 below the 2022 level.
“FHBs have always tended to be willing to compromise on location or property type to make the shift from renting into ownership, but lately there hasn’t been much need to take such an approach,” said Cotality NZ chief property economist Kelvin Davidson (pictured left).
Demand is broad-based, with first-home buyers making up just over 37% of purchases in the wider Wellington area.
Low-deposit lending a key support
Access to low-deposit finance remains important. Reserve Bank data cited in the report shows more than half of first-home buyer loans go to borrowers with deposits under 20%, and Westpac’s lending records show an average loan-to-value ratio of a touch over 80%.
The trend is visible across the wider market. Experian’s analysis of RBNZ data shows 17% of all mortgage funding in August went to loans above 80% LVR, up from 13% a year earlier, a shift Experian flagged as noteworthy with rates heading higher.
Mortgage costs have also helped. With two-year fixed rates lower than at their 2023 peak, the report estimates the average first-home buyer’s minimum monthly payment is about $560 lower, and around $685 lower in Auckland.
Rates now on the rise
That tailwind is fading. Westpac NZ senior economist Satish Ranchhod (pictured right) said one- and two-year fixed rates have risen about 0.75 percentage points over the past year, and Westpac expects further official cash rate (OCR) hikes.
The Reserve Bank held the official cash rate at 2.75% on 28 October in a split vote, but all committee members agreed tighter policy is likely.
“Even with the recent rise in mortgage rates, the housing market is still a lot more accessible for first home buyers than a few years ago,” Ranchhod said.
With upward pressure on borrowing costs, he said it was “a good time for prospective first home buyers (or anyone with a re-fix coming up) to think about the best way to structure their borrowing”.
Westpac expects average house prices to fall 1.4% over 2026 before rising 1.8% in 2027.
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