Nearly 11,000 tap into their KiwiSaver funds - including employers' contributions - to buy their first properties.
The number of first-home buyers using KiwiSaver savings to get a deposit on a house has almost doubled in the past year as the scheme turns six - and the Government has forked out $15.7 million in first-home subsidies on top of that.
Figures from Revenue Minister Todd McClay show 10,733 people got money from their KiwiSaver accounts to help with a deposit in the past year, withdrawing an average of $11,200 - a total of $120.2 million.
The first-home subsidy, for those earning less than $100,000 a year, is also being used more: the Government paid $15.7 million to 4488 people in the year to May, up from $9.5 million in the previous 12 months.
Last year, the full $5000 grant was available for the first time. It is a first step onto the market for many struggling with rocketing house prices.
However, the subsidy is not a realistic option in some overheated areas. To be eligible, the property being bought must be worth less than $400,000 in Auckland, Wellington and Queenstown. In Auckland, the average house price in May was $628,205, according to QV. The cap in other areas is $300,000.
Financial writer and Herald columnist Mary Holm said KiwiSaver was a sensible way to save for a first home because as well as their own earnings people could withdraw their employer contributions and the returns earned on the total amount in the account - including returns on the Government contributions, which could not themselves be withdrawn.
"So you are going to have a considerably bigger amount of money than if you weren't in KiwiSaver. The only negative of saving for a first home through KiwiSaver is you have to wait for three years before you can take the money out."
Holm said allowing the first-home withdrawals was a good feature because it encouraged younger people to join the super scheme early.
"It makes sense for younger people. For teenagers and people in their 20s, retirement is a foreign concept for them - it's so far away. But buying a first home is not; it's something they can aim at."
Holm said although governments could change the rules, there was no real reason to change the first-home buyers' withdrawal scheme because it did not cost the Government.
It was possible a government looking to save cash could look at the scale of the deposit subsidy scheme, but she expected that would happen only with a significant notice period.
"We also have to remember this is a democratically elected government and if they did it suddenly and made a lot of people unhappy, they are likely to lose votes for that. So I would think they would have to give a fair bit of warning for that. But there is always that risk."
The success of the scheme has renewed calls for KiwiSaver to be made compulsory. It was set up under Labour in 2007 and this year the minimum contribution lifted to 3 per cent for employers and savers.
Currently people who start new jobs are automatically enrolled in the scheme and the Government is looking at auto-enrolment of all workers.
However, Opposition parties are calling for compulsory enrolment. The Labour Party's finance spokesman, David Parker, said the increased use of the superannuation savings scheme by first-home buyers showed it was a success.
"KiwiSaver is coming of age and it should be compulsory. It's good for the economy and for individuals."
Mr McClay said 2.1 million New Zealanders were now in KiwiSaver, and 25,000 had joined in the last month alone.
He said that as well as providing people with more security in their retirement, the scheme was an important source of investment funds for the New Zealand economy.