No matter who you were, or where you were buying - 2024 was a tough one for everyone. High interest rates, tight lending rules, and the cost of living made it a hard year for the housing market. But as the dust settles, signs of change are emerging as interest rates continue to fall, and buyers begin to adjust their game plans for the year ahead.

So how have the last 12 months been for our three main buyer groups, and what can we expect to see from them as we continue to move deeper into 2025?

FIRST HOME BUYERS

CoreLogic NZ Chief Property Economist Kelvin Davidson says despite the economic challenges of 2024, last year was still a strong one for first home buyers (FHB). The buyer group made up a record 26.1% of property purchases, surpassing the previous record set the year before.

“There’s lots of things working in a first-time buyer’s favour. Prices are still down 18 - 20% from the peak, depending on where you are, which has made it cheaper to enter the market.”

“But also, there are the extra benefits of being able to access your KiwiSaver as well as the allowance of banks to lend out at less than 20% deposit, which pretty much all seems to go to first time buyers.”

Davidson says that because conditions have been particularly tough for investors, it may have opened up opportunities for first-home buyers that wouldn’t have existed otherwise.

But despite the decline in interest rates towards the end of 2024 he believes market share still would have remained consistent across the entire year.

“I don't think the market share numbers would have changed much throughout that time. Because lower interest rates help everybody, that means it's not just one group's market share that will benefit from paying less, everybody’s transactions increase.”

“You can still have each of the groups keeping the same market share as they had before but buying more deals overall.”

As for KiwiSaver, while it’s not necessarily a new benefit for FHBs, Davidson says that with every passing year it becomes a more important factor as balances increase.

“It’s just one more year to build up your pot and that sort of effect becomes more significant making it easier to get on the ladder.”

But while it's been a record year in terms of market share, the number of FHB transactions hasn’t broken any records.

“Market share is one thing, but the number of deals is another. So, the market share has been very strong, but it has been a quiet overall market with 20,850 transactions.”

Looking ahead to the rest of 2025, Davidson says there’ll still be some good opportunities for first home buyers, but he expects their market share may come down.

“We think that overall sales will rise from 80,000 to 90,000 this year so there’s a bigger total pie. There’ll be more investors and relocating owner-occupiers and I think things will shift more in those groups’ favour.”

“I wouldn't be surprised if FHB market share fell from to 23% or 24%, but because the overall pie is actually larger that group would still end up buying 1000 more properties than they did before.”

Davidson says because of that it will be important to question any rhetoric around the ‘demise of the first home buyer’.

“Yes, market share might go down, but you can still have more first-time buyers. So, I'm almost trying to preempt those headlines.”

“That’s why it’s important to analyse both market share and the overall number of transactions.”

RELOCATORS

Davidson says relocators made up 26.5% of housing activity last year, which he says was relatively low for a group that usually drives the market.

“Their market share has been below average over the past couple of years. They've been relatively quiet, still active, but just staying put a bit longer than they normally would.”

That’s due to a myriad of reasons.

“Confidence has been low. People aren't necessarily prepared to commit to that next purchase when there's perhaps some uncertainty about their job.”

Davidson says there’s also some issues with the market as well, that’s putting the brakes on the transaction process.

“It's taken much longer to achieve a deal. Because of a lack of confidence, and some restrictions on things like bridging finance you really had to sell before you buy.”

“That’s made those housing chains a bit longer and made it harder to get a sale and then purchase the next one.”

That means many of those already in a home haven’t been able to take advantage of the weaker market to get a good deal.

“There's decent evidence that a downturn is a good time to be a mover. Yes, you might sell your house for a bit less than you wanted, but you might get a bargain on the next place too.”

“But you’ve obviously got to iron out all of the admin especially when the majority of offers are likely to be conditional.”

But looking forward to the rest of 2025, Davidson says because many have stayed put there’s probably a bunch of pent-up movement waiting to happen.

“Life still happens, and at some point, they'll need to move. I wonder if that starts to come through this year.”

INVESTORS

Davidson says mortgaged multiple property owners have had a couple of quieter years as well, with their share of activity at 21.7% in 2024, versus the average since 2005 of around 24.5%.

Meanwhile cash paying multiple property owners were also down, making up 13.3% of housing activity.

“Firstly, that can be put down to some of the rules of the previous government. Interest deductibility being taken away was a big one and then coupled with the simple fact that mortgage rates were above 7% for half of 2024.”

But things are starting to turn around.

“We've got interest deductibility going back to 100%, loosened LVRs and the brightline test being reduced.”

Ultimately though, for investors Davidson says lower interest rates will make the biggest impact this year.

“Those rates have gone down from 7% to 5%, and for your mum and dad investor types that could save them around $10,000 a year.”

“We’ll definitely see more of them come back into the market this year.”

But even though there’s brighter days ahead, Davidson says there’ll still be some restraints as well.

“Investors will still have to top up the rental payments they receive from tenants to cover the mortgage. But those weekly top-ups may go from $350 to $200.”