Not too hot, not too cold. Just right.
That’s the vibe we’re seeing across New Zealand’s housing market right now—call it a Goldilocks moment, if you will—and it’s great news for first home buyers. Conditions are now ripe for the picking for anyone hoping to get a foot onto the property ladder.
To help us unpack just what everyone means when they say, “it’s a buyer’s market out there right now”, our Chief sat down with Squirrel mortgage adviser, Emma Wallace, and Cotality (formerly CoreLogic) Head of Research, Nick Goodall, for our latest episode of Live At The Nut Bar.
Read on for their insights into just how we got here, plus some tips and tricks to set first home buyers up for success in the current environment.
2020-2024: From FOMO to FOOP
When the world went into lockdown in early 2020, and the global economy came to a standstill, New Zealand house prices going through the roof wasn’t exactly on anyone’s bingo card.
But then, in order to keep the domestic economy ticking over, the Reserve Bank dropped the Official Cash Rate (OCR) to 0.25%, its lowest ever, in March 2020.
All of a sudden debt became a whole lot cheaper—mortgage rates bottomed out below 3.00%—and, after an initial lull in activity during lockdown, the housing market went into a frenzy.
Demand massively outstripped supply, forcing people to push the limits of their borrowing power in order to secure a property. Average NZ house prices skyrocketed by more than 30% over the 12 months to May 2021, even more in some regions.
Nick Goodall says, “For anyone that was active in that market, trying to buy a property, they were faced with a lot of competition—and people were having to really stretch themselves, borrowing more than six times their income in many cases.”
FOMO (a.k.a. fear of missing out) had officially taken hold, making for a hectic time for first home buyers trying to get on the property ladder.
Emma Wallace adds, “People were going to open homes, and the front doorway was just full of shoes. Buyers were cutting corners on due diligence because they felt like they just didn’t have time, and if you missed out on the property, you’d dropped that extra cash for nothing.”
By late 2021, all that cheap debt (plus free money from the Government) had sent inflation soaring—hitting 7.3% in mid-2022—meaning the Reserve Bank was forced to start hiking the OCR again to get things back under control.
It eventually peaked at 5.50% in May 2023, taking the popular one-year fixed mortgage rate from its COVID-low of 2.25% to around 7.50% by early 2024, and sending New Zealand into a nasty recession.
Meanwhile, as interest rates tracked upwards and borrowing power took a hit, buyers stepped back from the market. And without the demand there to support ongoing growth, house prices started to soften.
Soon, FOMO was replaced by a fear of overpaying (i.e. FOOP). Why buy a home today when it will be cheaper tomorrow? No-one wants to catch a falling knife.
Goodall says, “That desperation in the market definitely came away, transactions fell significantly. From the normal average of about 100,000 sales per year, numbers fell to around 60,000 or 65,000 at their lowest. Sellers didn’t want to sell [at the price they could get] and the buyers weren’t necessarily there.”
All up, average house price in New Zealand fell by 17% between mid 2022 and late 2024, and by as much as 20% to 25% in major centres like Auckland and Wellington.
2025: Finally, somewhere in between—a.k.a. just right
With inflation now back under control, the RBNZ has delivered a series of OCR cuts over the last few months, from 5.50% down to 3.25%, that have brought mortgage rates down pretty significantly.
The one-year rate is now sitting at 4.89%—down from its high of 7.50%, and roughly in line with its long-term average over the last 15 years or so.
The expectation is that we’ve got one (maybe two) more OCR cuts to come over the next few months, which should bring short-term rates down a bit further, but we’re getting pretty close to the bottom.
Even though the economy still has a way to go on its road to recovery, the housing market has finally started to find some sort of equilibrium.
Lower interest rates are starting to work their magic, slowly but surely tempting buyers back into the market. And while listing number are high (as the backlog of people who put off selling over the last couple of years works its way through) prices are holding steady as well.
House prices are up 0.4% over 2025 to date, which, Goodall says, “is as good as price stability”.
“The market feels relatively balanced right now. We’re seeing a little bit more demand, but there’s relatively high supply of properties, so that’s holding back that [price growth].”
The net result for first home buyers? They're spoilt for choice, and time is on their side.
The fear that’s characterised the market over the last few years (either of missing out or overpaying) has all but evaporated.
Between high stock levels, and less competition, Goodall says, "There’s no sense of desperation out there at the moment. Buyers know that if they don’t get a particular house, or if the due diligence turns up problems, there’s probably another one down the road that fits the bill. Maybe one they like even better."
And because sales are harder to come by in general right now, vendors are more open to conditional offers—which is absolute gold for buyers needing a few extra days to get their ducks in a row for finance or due diligence.
Wallace says, “It’s the perfect time for first-home buyers, especially low-deposit borrowers who need to place a 15-day offer [in order to get finance sorted]. When the market was too hot, agents probably wouldn’t have even presented that to a vendor.”
Last but not least, with interest rates looking to remain pretty stable over the next little while, borrowers aren’t having to worry about increasing rates chipping away at their affordability if they don’t buy straight away.
“If you go and get pre-approved, you can be pretty comfortable that even if you don’t get into a property in the next month or two, interest rates won’t be that different in three or four months’ time,” says Goodall.
In short: with interest rates nearing the bottom, house prices as good as stable, and stock levels high, it’s the perfect time for anyone wanting to dip their toes in.
Top tips to help first home buyers succeed in the current market
1. Getting your deposit together
The magic number you want to shoot for is 20% of the purchase price, which can be made up of a combination of:
- Personal savings (i.e. across savings accounts and term deposits)
- KiwiSaver balances (as long as you’ve been a member for at least three years, and leave $1000 in your account)
- Gifted funds / inheritances
- Guarantees—where someone else (usually a parent) acts as a guarantor over the portion of the 20% you don't have, usually secured over a property or term deposit.
Fronting up with that golden 20% will not only get you the bank’s best interest rates, but also mean you benefit from better cash backs, fewer added costs, and an easier time in general getting funding across the line.
That said, don’t be put off if you can’t quite get there.
Banks have been a lot more open to working with low-deposit borrowers in recent months—44% of lending to first home buyers in March was in the low-deposit space.
As long as you’ve got 10% to 15% saved (and you’ve got good income) there’s probably a way to make it work. Have a read of our low-deposit borrowing guide if you’re keen for more info.
2. Book in a chat with a good mortgage adviser
Once you’ve got your deposit more or less worked out, chatting with a mortgage adviser is a solid next step.
We can crunch the numbers to give you a clear idea of exactly how much you can afford to borrow, what your repayments would look like, and help get you sorted with a pre-approval, so you can go out there and get stuck into the house hunt with confidence.
Particularly if you’re working with less than a 20% deposit, speaking with an adviser is a great idea to help you understand what the process looks like, including the added costs and fees you’ll need to be aware of.
3. Get nosey.
Once you’ve worked out (broadly speaking) where you want to buy and the sort of property you’re after, there’s not a lot else for it than to just get out there and start looking.
At the very least, make sure you’re subscribed to email alerts on Trade Me and Realestate.co.nz so you can stay across new listings as they come up.
Even if you’re not quite ready to pull the trigger, don’t be afraid to head along to a few open homes. Checking properties out in person is often the best way to get clear on your wants vs. needs in a home—and what matters most to you.
Is it location? Is it a nice view? Is it a quiet street? Proximity to transport links? Do you want a doer-upper that you can make your mark on, or one freshly renovated and ready to move in?
What you value most might be different to the majority of other buyers out there.
As those properties sell, you’ll start to get a good benchmark for where the market’s at—how much people are willing to pay for what vs. how much you might be willing to pay. And that experience is going to be absolutely invaluable when you’re ready to take the plunge.