The headline looks like good news for anyone saving for a first home: the average price first home buyers are paying has come down. But the same data shows more than half of them are borrowing with a deposit under 20%. If you're trying to work out what a first home really costs, the price is only part of the picture.
What's happening
interest.co.nz reports that its estimate of the average price first home buyers paid in September was $673,000. That's the lowest since February 2025, and it has stayed under $700,000 since February this year. It's also $45,000 (6.3%) below the record of $718,000 set in April 2022.
First home buyers are a big part of the market. Reserve Bank data shows mortgages were approved for 2667 of them in September, which was 35% of all new mortgages approved to buy a property. When the data series began in January 2017, the figure was 1262 approvals and a share of close to 21%.
The average mortgage approved to a first home buyer in September was $573,678, down from just under $600,000 at the start of the year. But 50.3% of those approvals were low equity loans, meaning the buyer had less than a 20% deposit and faced low equity fees or margins from lenders. That share has hovered around 50% since June. Low equity borrowers also borrowed more on average: $683,383, against $513,208 for those with at least a 20% deposit. As the article puts it, "either way, that's a lot of debt."
Who it affects in New Zealand
First home buyers are the obvious group. Half of recent approvals involved a deposit under 20%, so if you're in the market, you're in good company. You're also likely to meet low equity fees or margins along the way.
Families and couples still saving are affected too. A lower average price can make the gap to a 20% deposit feel smaller, but it doesn't remove the choice between buying sooner with a smaller deposit or waiting to save more. That's a personal decision with trade-offs either way.
Investors and downsizers are indirectly affected. First home buyers make up about a third of mortgage-funded purchases, so what they're doing shapes demand across the market. We'd be guessing if we said how, so we won't.
What to do about it
We can't tell you what's right for your finances. A licensed mortgage adviser can, and it's worth a conversation before you commit to anything. In the meantime, here are general questions worth bringing to that conversation.
Ask how low equity costs work
The source mentions low equity fees or margins, but the detail varies by lender. Ask each one:
- Is the cost a one-off fee, a higher interest margin, or both?
- Does the extra cost drop away once your equity grows, and how is that measured?
- What does it add up to over the first few years of the loan?
Compare the whole loan, not just the price
The data shows how much the loan size shifts between a full deposit and a low one. A home with a lower sticker price and a heavier loan structure can cost more than it first looks. Ask for repayment figures at a few different deposit levels.
Budget beyond the mortgage
Legal fees, insurance, rates and maintenance all sit on top of the repayments. Maintenance is the one you can influence most through the type of home you buy.
Check what's fixed and what isn't
A fixed-price build contract takes one big unknown off the table. Ask any builder or developer exactly what's included and what would be extra, and get it in writing. Have a lawyer review the contract before you sign.
Our take
This is our view, as a Canterbury developer, and not a financial opinion.
We think a lower average price is welcome, but it's the least interesting number in this story. The number we'd watch is 50.3%. When half of first home buyers are borrowing with under 20% down, the real question is how comfortable the ongoing cost is, not how low the entry price is.
We also think the cost of running a home gets too little attention. Loan repayments are only one of the costs that come after settlement. A well-built, low-maintenance home, designed to last, is one way to keep upkeep from being an extra pressure. We build in concrete and Hebel for that reason. We can't promise what that will save you, because it depends on your situation, but it's a sensible thing to weigh up.
We should be upfront: we're a developer and we sell homes, so we have an interest here. That's why we try to explain the numbers plainly. Our first-home homes are designed to be attainable and high-spec, with standard deposits and fixed-price contracts, so you know the commitment going in. Because we handle every stage ourselves, from first design to final sale, the finished home matches what you were shown.
Low equity lending isn't automatically a bad choice, and a bigger deposit isn't automatically a better one. The right answer depends on your income, your plans and your tolerance for risk. That's a conversation for you and a qualified adviser.
Frequently asked questions
What is a low equity loan in New Zealand?
In the interinterest.co.nz report, a low equity mortgage is one where the buyer has less than a 20% deposit. Lenders may charge low equity fees or margins on these loans. The exact terms differ by lender, so ask for the details in writing.
Are first home buyers really paying less for their homes?
Interest.co.nz estimates the average price paid in September was $673,000, the lowest in 19 months and below the April 2022 record. That's a national average estimate. It doesn't tell you what any particular home in Canterbury costs, so check each home you're considering on its own terms.
How can I find out if I can afford a first home?
Talk to a licensed mortgage adviser or your bank about your own circumstances, including how deposit size affects your loan costs. A lawyer should review any sale agreement before you sign. If you're looking at our homes, we can walk you through what's included in the contract.
Thinking about a first home in Lincoln, Rolleston, Prebbleton or Christchurch? Register your interest with Sullivan Mitchell Residential for first access to upcoming homes, and we'll talk you through what's on offer, in plain terms.
Subject to developer terms and turnkey sale agreement. Architectural renders and plans are indicative. General information only, not financial or legal advice. Seek independent advice before buying.
Licensed Under @realty REAA (any post naming Klyne Real Estate or its agents) Photos show completed SMR homes and may differ from this development.