In this week’s Pulse, Chief Property Economist Kelvin Davidson looks at CoreLogic’s Buyer Classification data over the quarter, which showed a slight pullback by first home buyers (FHBs) while mortgaged investors gain ground.
You can read the full analysis attached and below.
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Santi
Embargoed until 00:01 AM, Wednesday 16 April 2025
Source: CoreLogic – Commentary from Kelvin Davidson, CoreLogic NZ Chief Property Economist.
In today’s Pulse, CoreLogic NZ’s Chief Property Economist Kelvin Davidson looks at the Buyer Classification data from the first three months of the year, revealing a slight pullback by first home buyers (FHBs) as mortgaged investor activity rises.
The comeback for investors is being driven by the smaller, ‘Mum and Dad’ buyers, who are increasingly looking at existing properties rather than new-builds.
FHBs still have a place in the market. With overall activity expected to pick up in 2025, they’re likely to buy more properties than in 2024, even if their share of activity drops.
First home buyers dip while investors rise
March’s CoreLogic Buyer Classification data shows that first home buyers accounted for 25% of all property purchases in the first quarter of the year. That was down from 26% in Q4 2024, and in fact the lowest figure for FHBs since the first quarter of 2023.
Meanwhile, movers (or relocating owner-occupiers) had a 26% share of activity in Q1, while cash multiple property owners (MPOs, including investors) and their mortgaged cousins both saw a higher market share, at 14% and 23% respectively.
These broad patterns have shown up across most of the main centres, although the wider Wellington area – City, Lower & Upper Hutt, Porirua – remains a ‘hotspot’ for FHBs, with their market share holding up at 35% in Q1.
An obvious factor here will be the relative weakness of Wellington property values (and improved affordability), which is likely playing into the hands of FHBs; provided they feel confident about their job security.
Investors are benefiting from lower mortgage rates
Clearly, the falls in mortgages rates over the past 6-9 months from more than 7% to less than 5% have benefitted anybody looking to borrow to purchase a property, however debt-backed investors might be gaining the most from these lower rates.
The reduced deposit requirements last year (from 35% to 30%) would have helped, alongside the shorter Brightline Test, and mortgage interest deductibility now back at 100%.
But it seems likely that the biggest shift in favour of mortgaged investors has simply been the reduction in the size of the top-ups that are generally required out of other income for a rental property purchase. When mortgage rates were above 7%, those top-ups could easily have been pushing $400 per week; but now they might typically be closer to $200. That’s still significant for a new investor, but much less of a hurdle than before.
The Buyer Classification data also shows us investor activity by size and it’s intriguing to see that the comeback has been powered by ‘Mums and Dads’. In particular, mortgaged MPO-2’s – those who own two properties in total after their latest purchase (i.e. effectively a new investor) – have risen from 6% of activity in mid-2023 to 8% now, with MPO 3-4’s rising from a trough of 4% towards 6% now.
New-builds are slightly less popular with investors
It’s also worth noting that mortgaged investors’ focus on new-build properties has lessened lately – they accounted for 30% of activity in this segment in 2023 and 29% in 2024 but have dipped to 27% so far in 2025. To be fair, it’s early days and that figure might rise back again. But a relative reduction in demand from mortgaged investors for new properties would certainly be consistent with the changes in interest deductibility, meaning that older properties no longer carry higher tax bills than new-builds.
At the same time, there’s an abundance of listings on the market at present, allowing investors to potentially snap up existing properties at a favourable price too.
What might lie ahead?
Part of our ‘housing market story’ for a while now has been that FHBs might see their market share drop in 2025 (from record highs in recent years) while mortgaged investors rise back up from historical lows. That now seems to be playing out.
But before anyone panics about the demise of FHBs, it’s important to point out that we expect the overall number of property transactions in 2025 to be about 10,000 higher than in 2024 – meaning FHBs can (and probably will) purchase more properties this year than last, even if their market share drops slightly.
Some of the supports that FHBs have had in recent years will certainly remain in place, such as access to KiwiSaver for at least part of the deposit, and a ‘monopoly’ on the low deposit lending allowances at the banks.
For investors, reduced mortgage rates have made property purchases more attractive from a cashflow perspective. In addition, any tariff-related uncertainty that hangs around for the medium-term may push some investors towards property where they might otherwise have considered shares or bonds.
