New Zealand’s property market is shaped by a mix of distinct buyer groups, each responding differently to shifting economic conditions and housing trends. From first-home buyers eager to get a foot on the ladder, to smaller-scale investors eyeing opportunities in more affordable segments, and existing homeowners considering their next move, these groups collectively influence demand and help set the tone for where the market is heading.

According to Cotality’s latest Buyer Classification data, first home buyers remain active and resilient to challenges within the market, while ‘Mum and Dads’ with smaller portfolios are making an investment comeback. So exactly how is each group shaping up, and what can we expect towards the end of the year?

FIRST HOME BUYERS

In the three months to June, first home buyers (FHBs) continued to be a dominant force, making up just over 26% of all property sales during the period, close to record levels. Regional figures underline their strength, with FHBs representing 27% of purchases in both Christchurch and Dunedin, 29% in Auckland, 32% in Hamilton, and an impressive 36% across the wider Wellington region.

As market activity picks up, the volume of first-home buyer transactions is also climbing steadily nationwide.

Cotality Chief Property Economist Kelvin Davidson says FHB activity was strong across the board.

“Some markets have seen prices fall more than others, but most markets are still down from their peak, so prices are a bit cheaper for first-time buyers wherever you look.”

That, coupled with falling interest rates, has been the golden formula.

“So that's favoring first-time buyers as well as other lending rules around the LVR requirements.”

“The 20% allowance that banks have to lend at a low deposit has mostly been soaked up by first home buyers, that coupled with their KiwiSaver's has been a huge help.”

But Davidson says it’s more than just the numbers making a huge difference, lifestyle factors are hugely influential too.

“In most cases, rents would be cheaper than the weekly cost of a mortgage, but the want for security of tenure definitely outweighs that. They also want the ability to point to a wall and say - that’s mine.”

“The rental rules have also shifted back in favour of landlords, so having your own place definitely gives you more certainty.”

While house prices aren’t completely dirt cheap, they are sitting at 16% below their peak, giving FHBs even more momentum to move.

“I think that there’s probably going to be a continued window of opportunity here, because there's a lot of listings on the market.”

“It has been called a buyer’s market, and I’d imagine it’ll stay like that for a while until the backlog of listings is cleared.”

INVESTORS

Mortgaged multiple-property owners are steadily regaining ground in the market. They made up roughly 23% of all purchases in the second quarter, still slightly below their long-term norm of 25%, but a clear improvement from the 21% low point recorded mid-last year.

In the main urban hubs, their presence was even stronger, with Auckland and Christchurch both sitting at 26% of transactions, and Hamilton edging ahead at 27%.

Davidson says a lot of the rebound can be credited to smaller ‘Mum and Dad’ investors, which include those with a total portfolio of up to four properties (including their own home).

“There's a number of things people are pointing to, like the LVR rules being loosened last year, which means you get in with a smaller deposit. The brightline test was also shortened, and obviously, interest deductibility has fully come back into play for mortgage investors, so they get smaller tax bills.”

But he says the thing that’s made the biggest difference is the drop in interest rates.

“The amount of cash flow top-up that investors will be having to put in has come down a lot. Potentially last year, depending on the exact property purchase, someone looking to buy a rental property might have been topping it up by $400 - $500 a week. Now those top-ups might be closer to $200.”

“Your standard Mum and Dad investor perhaps has some equity in their house, and they're looking to tap into that to buy their first rental. Monthly cash flow would be the biggest barrier, and yes, $200 a week is still a substantial top-up, but it's a lot less than it was.”

Cotality’s data also revealed that many of the investors were focusing on the more affordable end of the market, too.

“I think there's still a degree of caution, and people aren't just piling in at any price. People have also still got the post-covid experience in their mind with the big falls in property prices. They don't necessarily want to overextend themselves.”

Davidson says there are still a number of factors that mean some considering purchasing a rental just haven’t quite made the leap yet.

“The price of council rates is still a big concern, the same with house insurance. But also, the potential of political risk too. Some will be sitting on the fence thinking about the time when Labour gets back into power and interest deductibility could be taken away again or scaled back.”

As for investors or multiple property owners with cash, they make up 12% of the market.

MOVERS

Making up 26% of all property sales, Davidson says that movers are certainly a group to watch in the coming months.

“There's always movers out there. There's always owner-occupiers looking to relocate as there's always a need to adjust living situations for a job change or for family, but their share of activity has been lower over the last couple of years than what it normally might be.”

Factors like getting finance, a lack of market confidence, and the need to sell their existing home in a quieter period of activity are all to blame.

“Movers often want to get that sale contract all locked in before committing to the next deal, and that’s been really difficult as housing chains have been slow and extended. That has really helped to keep owner-occupiers where they are, rather than moving around as much as they normally would.”

But Davidson says at some point that activity will start to pick up again.

“There’s a lot of pent-up demand. But whether it's going to be right now, tomorrow or next week, we won’t know.”

“Lower interest rates are always going to help as well as a bit of confidence coming back to the market. Perhaps when we start to see the unemployment rate finally start to ease down again, people can have a bit more confidence about job security.”

He says it’s slow moving, but it will happen.

“I'm not sure movers are necessarily going to suddenly bounce back straight away, but fingers crossed by the end of the year perhaps.”

As for the buyer groups making up the other 10% of the market, they include “new to market“ 5%, “re-entry” 4%, and “other” 1%.

As the market steadies after a turbulent few years, the behaviour of different buyer groups is offering valuable clues about where housing trends are heading next. Together, these shifts point to a market that is cautiously rebuilding momentum, one still shaped by affordability pressures and lending settings, but also by renewed confidence that opportunities exist for those ready to make their move.