The average price first home buyers are paying for a home dropped to its lowest level in 19 months in September

The average price first home buyers paid for a home dropped to its lowest level in 19 months in September.

Interest.co.nz estimates first home buyers paid an average price of $673,000 to get into a home of their own in September, the lowest it has been since February 2025.

The estimated price paid by first home buyers has been below $700,000 since February this year, and has declined by $45,000, or 6.3%, from its record high of $718,000 in April 2022.

According to the latest Reserve Bank data, mortgages were approved to 2667 first home buyers in September. That was 35% of all new mortgages approved for the purpose of purchasing a property, suggesting first home buyers currently make up about a third of residential property sales purchased with a mortgage.

First home buyers have been a growing presence in the property market, both in terms of their numbers and their share of residential property purchases.

When the Reserve Bank data series was introduced in January 2017, just 1262 mortgages were approved to first home buyers, giving them a near 21% share of residential mortgages approved for the purpose of buying a property. So they have become an increasingly important part of the housing market, in spite of affordability issues. See the graph below for the monthly trend.

Of course they are also taking on more debt, although the size of their mortgages has been in decline recently.

Based on the Reserve Bank data, the average size of the mortgages approved to first home buyers in September was $573,678. That has declined from just under $600,000 at the start of this year.

More than half first home buyers taking on low equity loans

However, because of the high costs of housing, increasing numbers of first home buyers are funding their purchase with a low equity mortgage, where they have less than a 20% deposit, and face low equity fees or margins from lenders.

In September 50.3% of the mortgages approved to first home buyers were low equity loans, with that figure hovering around the 50% mark since June.

Borrowers taking out these low equity loans also appear to be borrowing more than those with a full deposit.

The average size of the low equity mortgages approved to first home buyers in September was $683,383, compared to $513,208 for those with at least a 20% deposit, but either way, that's a lot of debt.