Buying guide

Another good year for first home buyers ahead?

CoreLogic data shows that first home buyers accounted for a record high 26% of property purchases across NZ in 2023.

Last updated: 12 March 2024

The CoreLogic Buyer Classification data shows that First Home Buyers (FHBs) accounted for a record high 26% of property purchases across Aotearoa in 2023, surpassing the previous mark of 23% in 2021. To be fair, the raw number of FHB purchases last year wasn’t a record, but at around 17,000 across 2023, it wasn’t too bad either.

So, what have those successful First Home Buyers been doing, and what might happen in the year ahead?

There’s obviously a huge range of factors that might have been helping FHBs secure their first home, including, if they’re lucky, assistance from the fabled Bank of Mum and Dad, accessing Government support in the form of First Home Grants and First Home Loans, and also a willingness to compromise on the type and/or location of the property, e.g. buying a smaller (cheaper) dwelling and/or further away.

But that’s not all; FHBs have also been tapping their KiwiSaver for at least part of the deposit, as well as making full use of the low deposit lending speed limits at the banks. Indeed, Reserve Bank mortgage data shows that as much as 80% of low deposit (or high loan to value ratio/LVR) lending to all owner occupiers in fact goes to FHBs. Put another way, 35-40% of FHBs have recently been buying their first house with less than a 20% deposit.

New build, lower deposit?

One key avenue here is looking at new-builds. They’re exempt from the LVR rules, meaning that banks can just apply their own lending criteria to these purchases without necessarily having to abide by the RBNZ mandates. This might mean a 10% deposit rather than 20%, for example. And of course, the buyer gets a new property with lower maintenance requirements/costs.

On top of all of that, mortgaged investors haven’t been as active as they might ordinarily have been, possibly opening up some gaps for FHBs to fill. It’s certainly true that the sums are borderline for many would-be investment property purchases at present, given low rental yields, high mortgage rates, elevated deposit requirements, and (at least for now) reduced ability to claim mortgage interest costs as a tax deductible expense.

But now, let’s think about the year ahead, how might things look for First Home Buyers?

It’s worth noting that a few more investors might start to expand their portfolios again this year, or invest for the first time, given that rents are rising, LVRs are set to loosen from the middle of the year (required deposits dropping from 35% to 30%), and interest deductibility is being phased back in. Mortgage rates might even start to drift downwards a little later in the year.

Of course, some of these things will help FHBs too. In particular, the banks’ allowance for low deposit lending is set to rise from 15% of owner-occupier activity to 20%, which should push more lending capacity towards FHBs. As we outlined last month, it’s also worth noting that caps on debt to income ratios shouldn’t be much of a concern for FHBs either, at least initially.

Meanwhile, any falls in mortgage rates that might start to slowly filter through later in 2024 would also improve a typical FHBs’ ability to borrow, not least through potentially reducing the theoretical servicing test rates that the banks also look at in a mortgage application.

Overall, it’s important to remember that whatever goes up must eventually come back down again, and FHBs’ market share was never likely to remain so high forever. Indeed, it wouldn’t be a surprise to see the figures ease back this year from that mark of 26-27% in 2023. But in a busier property market, where more deals are being done, FHBs could still see a higher number of purchases, even as their % share falls. In that sense, I expect another pretty good year for FHBs in 2024.


Kelvin Davidson
Kelvin Davidson

Chief Property Economist, CoreLogic -

Kelvin joined CoreLogic in March 2018 as Senior Research Analyst, before moving into his current role of Chief Economist. He brings with him a wealth of experience, having spent 15 years working largely in private sector economic consultancies in both New Zealand and the UK.

In his role with CoreLogic Kelvin’s focus is on keeping up to date with what’s going on in the property market and continually finding different ways for viewing and interpreting it. Kelvin’s economics background means that he knows his way around a spreadsheet, but more importantly he always puts more emphasis on providing the key insights and telling a story, whether his audience be clients or the media.