First-time buyers have surged into the property market with a strong start to the year, significantly outpacing long-term historical trends. New data from Cotality reveals that 27% of all home purchases in the first quarter of 2026 were made by first home buyers, a figure that sits well above the long-term average of approximately 22% recorded since 2005.
This uptick in activity suggests a shift in market accessibility, driven by a combination of cooling price pressures and more flexible lending criteria. For many prospective owners, the barrier to entry has lowered just as mortgage rates have begun to ease, creating a window of opportunity for those who were previously sidelined by the steep climb of deposit requirements.
The trend is particularly pronounced in several key regional hubs. In the Hutt Valley, activity peaked with 41% of purchases in Upper Hutt and Lower Hutt being first-home entries. Wellington followed closely at 37%, whereas Hamilton saw 33% and Auckland 30% of its first-quarter sales go to those buying their first property.
Other areas showing strong momentum include Gisborne, Napier, and Palmerston North—all at 31%—while Hastings and Invercargill both recorded 29% for first-home buyer activity.
The mechanics of market entry
According to Kelvin Davidson, Cotality’s chief property economist, the current environment provides “multiple supports” that make homeownership more attainable. These include a combination of lower house prices, reduced mortgage rates, and the continued utility of KiwiSaver for deposits.
Crucially, the impact of loan-to-value ratios (LVRs) has played a pivotal role. Under current Reserve Bank of New Zealand rules, banks have more leeway to lend to those with low deposits. Davidson noted that not needing a full 20% deposit is proving beneficial, with Reserve Bank figures showing that more than half of first home buyer loans in January and February were executed with less than 20% equity.
“It remains a sizeable chunk of cash, but still a lot more feasible for more people,” Davidson said.
The return of the small-scale investor
While first-home buyers are leading the charge, there is a visible return of mortgaged multiple property owners (MPOs). After dipping to 21% of activity in the second quarters of 2023 and 2024, this group has risen back to 24%, aligning more closely with long-term averages.
This resurgence is primarily driven by “smaller players”—investors purchasing their second home, typically consisting of a primary residence and a single rental property. This group saw increased activity in Auckland (26%), Hamilton (28%), and Christchurch (25%).
The primary catalyst for this group is the shift back to 100% deductibility for interest costs. When combined with lower mortgage rates and softer house prices, the “top-up” required from an investor’s other income sources to maintain cash flow has dropped significantly.
| Market Condition | Mortgage Rates | Estimated Weekly Top-up |
|---|---|---|
| High Prices / High Rates | ~7% | $400 – $450 |
| Current Market Conditions | Reduced | $150 – $200 |
Davidson noted that while building insurance and council rates have continued to rise steadily, the reduction in interest costs has more than offset those expenses for the typical new investor.
Biding time and external headwinds
Despite the activity from first-time buyers and small investors, “movers”—existing homeowners relocating—remain unusually quiet. This group accounted for 26% of activity in the first quarter, slightly below their 28% average. Davidson notes that this group typically responds to wider consumer confidence, job security, and economic growth, all of which have been “patchy” recently.
Looking ahead, the market faces a layer of geopolitical uncertainty. Davidson pointed to the conflict in Iran as a factor that could complicate economic recovery and housing stability. While there is hope for a permanent ceasefire, the potential for continued dislocation remains a risk.
This uncertainty has led to a revision of some forecasts. A previous projection that property sales volumes would rise from 90,000 in 2025 to 100,000 in 2026 may now appear too optimistic. Instead of a modest 5% gain in property values this year, prices may remain flat or even decline slightly.
For multiple property owners, further headwinds include weak rental growth, the possibility of a capital gains tax, and debt-to-income ratio caps. Davidson suggested that if the economy recovers and “movers” return to the market, the percentage share of first home buyers may drop slightly over the next 12 to 18 months, though the raw number of first-time buyers could still increase if the overall volume of sales grows.
Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice.
Market participants will be watching for updated Reserve Bank data and official economic growth figures to determine if the current momentum for first home buyers can be sustained through the remainder of 2026.
Do you think current LVR rules are doing enough to aid first-time buyers? Share your thoughts in the comments below.
