First-home buyers' share of the property market has fallen to its lowest level in three years, but there is a suggestion moves to cool the market should lift their involvement.
The latest report from research firm CoreLogic shows first home buyers took 21.5 per cent of the market in the first three months of the year, the lowest since 2018, from recent high of 24.8 per cent.
"They are still active in terms of numbers of purchases, but a declining market share hints at 'fatigue' and a growing struggle to keep up with other buyer groups and also the ever-rising deposit requirements," the report said.
It said changes to tax policies aimed at discouraging leveraged investors from buying existing properties were well timed.
The report said the average age of first-home buyers had held steady over the past four years at between 34 and 35, with average first-home purchases at about last year's national median price of $650,000.
However, the report pointed to signs that first-home buyers were struggling to keep up with market prices in the first quarter, making it difficult to save enough of a deposit.
"They may face more competition for new builds, a segment they've recently been pretty keen on," it said, as the government's recently revised tax policies do not affect the new-build market where investors are concerned.
CoreLogic chief property economist Kelvin Davidson said the government's changes and the Reserve Bank's reintroduction of loan-to-value bank lending restrictions were needed to redress the imbalance.
"I think probably, if anything, the balance has maybe been slanted a little bit too much towards investors lately," he said.
"Now whether the policy moves are right and whether they've been to the right scale, who knows. But certainly, it's good to have first time buyers in the market, that's for sure."
Best value for first-home buyers was found in Christchurch, where the median price was still below $500,000. That was less than prices paid in many provincial areas, and where it was cheaper to buy than rent.
"The relative affordability in our second-largest city is so much better than anywhere else, and especially appealing ... because the city's business community is established and jobs are on offer," the report said.
Provincial areas proving more popular for first-home buyers were Gisborne (22 per cent), Rotorua (23 per cent), and Queenstown (14 per cent).