First-home buyers hold firm as investors wait out the election

Mortgage advisers say first-home buyers remain the dominant force in New Zealand's housing market, even as investors continue sitting out and overall activity stays short on urgency heading into spring. That's according to the Tony Alexander Mortgage Advisers Survey for August.

First-home buyers steady, investors still cautious

The August survey drew 57 responses from advisers nationwide. Only a net 5% reported fewer first-home buyers in the market this month, a marked improvement from a net 12% in July and the low of 54% recorded in April, when the withdrawal following the outbreak of war in the Middle East was at its sharpest.

Independent economist Tony Alexander (pictured) said evidence from his other surveys "shows that first-time buyers remain the dominant force in New Zealand's housing market."

Investors have been slower to return. A net 30% of advisers reported seeing fewer investors this month, unchanged from the previous two months, though still better than the net 48% negative readings seen in April and May.

One adviser summed up the split bluntly: "First-home buyers are the clear exception and the most active part of my book," they said, adding that "investors have largely parked themselves until after the election because nobody wants to guess at future tax treatment."

Alexander's separate NZHL Property Report, surveying 287 real estate agents, found an even sharper pullback: a net 49% reported fewer investors in the market. He called it a structural shift rather than a temporary lull — inexperienced or under-resourced investors, he said, are no longer rushing in for fear of missing out.

Lending conditions stay supportive, but the rate outlook is murkier

Bank willingness to lend remains solid, with a net 26% of advisers reporting banks are more willing to advance funds, roughly steady since June and a sharp turnaround from the low net 2% positive readings of April and May.

Alexander noted that willingness to lend "has been good since early-2023," with the current settings looking "about normal for the post-boom and slump period."

Advisers pointed to easing loan-to-value ratio restrictions and greater flexibility on debt-to-income measures, though several noted banks are still requesting heavy documentation from some borrowers.

On rate preferences, almost 80% of advisers said borrowers favour fixing for two years, a trend that has held since December, while the one-year term has fallen out of favour and shows no signs of returning.

Refinancing enquiries, which spiked in December amid competitive cashback offers, have since cooled as interest rates ticked higher and banks eased back on upfront incentives.

A market short on urgency, but not without activity

Overall sentiment among advisers points to a cautious but functioning market. As one adviser put it, "buyers hold all the cards and are conspicuously reluctant to play them," a dynamic reinforced by soft prices, election-year caution and winter seasonality.

Even so, several advisers reported enquiry levels picking up in recent weeks, suggesting the slowdown may be more cyclical than structural as the market heads toward spring.

Advisers will be watching closely ahead of the Reserve Bank's next Monetary Policy Statement, confirmed for 2 September, for further signals on the size and pace of upcoming hikes.

Access the full report for more information.

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