Record first-home buyer share is an investor retreat in disguise

First-home buyers took a record 29.5% of residential property purchases in the September quarter, according to the Cotality/Westpac First Home Buyer Report. That beat the record set only three months earlier. Most coverage will call it an affordability breakthrough. It is better described as a market reshuffle. Lower rates have helped, but the bigger reason first-home buyers are winning is that investors have largely stopped turning up.

Cheaper money helped at the margin

The rate relief is real. Westpac senior economist Satish Ranchhod says lower mortgage rates have shaved around $560 off the average first-home buyer’s monthly payment compared with 2023, and about $685 in Auckland. Across all households, mortgage servicing costs have eased to 42% of gross household income from a post-Covid peak of 56%.

But if cheaper money were the whole story, first-home buyer lending would be surging. It isn’t.

The lending data tells a different story

Reserve Bank figures released on 27 October show first-home buyers borrowed $1,530m in new mortgages in September, slightly down from $1,572m a year earlier. Investor lending, meanwhile, fell from $1,735m to $1,335m. That is a 23% drop, the steepest of any borrower group.

Cotality chief economist Kelvin Davidson says as much himself. First-home buyers’ share had been rising because they were doing more deals, but now “other groups are actually falling even faster”, so their share keeps climbing even as they buy a few fewer properties.

Owner-occupiers trading up are also sitting tight. Mover purchases fell from 25,044 in December 2025 to 23,398 by August. Sarah Wood, chief executive of realestate.co.nz, put it bluntly in September. The record share is “mostly a reflection of there being fewer investors looking to buy”.

Why landlords lost their appetite

The investor maths no longer works as well as it did. Cotality points to flattening rent growth, economic uncertainty, the election and questions around future tax settings as reasons for softer investor activity. Add higher council rates and insurance premiums, and a leveraged rental purchase starts to look like a lot of risk for thin yield.

The shift has been building for a while. In March 2026, RNZ’s The Detail described a “great property breakup”, with younger would-be investors putting money into KiwiSaver and managed funds instead, intensification rules flooding the market with townhouses, and departures to Australia adding listings.

Supply did the quiet work

Competition eased because stock piled up. Wood says there are 45% more homes for sale than three years ago. The Reserve Bank’s loosening of LVR limits in December 2025 widened the door further. High-LVR lending to first-home buyers hit $850m in September, up from $575m two years earlier.

This is not a one-quarter blip. Housing ministry analysis earlier this year found December 2025 produced 3,597 new first-home buyer mortgages, a record, 7.5% above the 2021 peak. In June, RNZ reported buyers were grabbing their moment in a soft market.

What the reshuffle means for business

For developers, the buyer has changed. First-home buyers increasingly want standalone houses, and they now have the stock to be choosy. Investor-friendly townhouse and apartment product built for yield is chasing a shrinking pool of buyers. Product mix needs to follow the owner-occupier.

For mortgage advisers, the client base is now younger, more highly leveraged and more dependent on KiwiSaver deposits. That is good volume, but it carries more risk if unemployment rises or rates turn.

For agents, this is a patient market. Buyers with plenty of listings to choose from don’t rush, and vendors need to price accordingly. Commission income depends on turnover, and turnover is soft across movers and investors alike.

For landlords and the rental market, the retreat is the longer-term worry. Every rental sold to a first-home buyer is one fewer property for tenants. With rents flat and listings high, nobody is feeling that yet. Once the surplus clears, private rental supply could tighten quickly, and investors would want clear, stable tax settings before returning. Election-year uncertainty doesn’t help.

The record share is good news for the people buying. It is not proof that housing has been fixed. Investors have stepped back, and the more important question is what happens to rents when they’re needed again.

Sources

• The Post: First-home buyers claim record 29.5% market share of residential property sales (2026-10-29)
• Newsroom: First-home buyers claim record share of NZ property market (2026-10-30)
• NZ Herald: First-home buyers claim record share of housing market as prices retreat (2026-08-18)
• RNZ: Who’s slowing down the housing market? (2026-09-17)
• The Spinoff: First home buyers have taken over the housing market (2026-09-10)
• Cotality: Monthly Housing Chart Pack – June 2026 (2026-06-25)
• RNZ: The Detail – The great property breakup (2026-03-07)
• HUD: It really is a first home buyers’ market (2026-03-26)
• RNZ: First-home buyers grab their moment in soft market (2026-06-25)