First home buyers are buying more houses but are also at greatest risk should interest rates rise and add thousands of dollars to their mortgage repayments.
That's according to analysts CoreLogic, who said investors had been buying fewer houses recently, which in turn was helping first home buyers once again snap up a greater share of properties.
Investors are now buying about 25 per cent of homes sold across the nation, down from a high of 28 per cent last year, while first home buyers are buying 24 per cent, up from 21 per cent.
But while that might be good news for first home buyers, CoreLogic warned it was new buyers - those with the biggest home loan debts - who would likely feel the greatest pain should predictions of rising rates come true.
Many would also be in uncharted waters, given that anyone who bought after 2014 had only ever watched interest rates fall, CoreLogic chief property economist Kelvin Davidson said.
"So the effects of a pattern of (rates) increases will likely come as a shock to many," he said.
This pattern of rising rates together with slowing house price growth in recent months could mark a "significant turning point" in the housing market, CoreLogic said, with some pundits warning the era of ultra-cheap money could be coming to an end.
The ultra-cheap money era came after New Zealand officials, like many other government and central banks around the world, responded to the onset of last year's Covid-19 pandemic by trying to stimulate the economy to ward off fears of a recession.
One of the key measures was to encourage banks to lend money to the public at cheaper interest rates.
That triggered an unexpected boom in the housing market as home buyers leapt at the chance to use the cheap money to buy, sending house prices skyrocketing by between 20 and 30 per cent in one year.
Now that inflation is creeping into other goods, such as food and petrol, economists expect the Reserve Bank to raise the cost of borrowing.
The four major banks - ASB, ANZ, BNZ and Westpac - have already responded to the spike in inflation by increasing their home loan rates last week.
CoreLogic's Davidson said the Reserve Bank could raise the official cash rate from a record low 0.25 per cent up by as much as 1.5 percentage points.
He said the big four banks' rate rises last week will lead a typical, recent buyer to pay an extra $1824 per year ($152 per month) in home loan repayments on their 30-year, $800,000 mortgage.
Should interest rates keep rising, and reach the long-term average of 6 per cent, that same new buyer would then pay an extra $19,164 in mortgage repayments per year, or $1597 per month.
"Even a new borrower with a lesser mortgage, say $500,000, will need to find another $246 to $388 a month ($2952 to $4,656 a year) in repayments if rates move up to 3.5 per cent or 4," Davidson said.
ASB has previously estimated that a 1 per cent rise in mortgages rates would potentially suck $3 billion out of mortgage-holders' pockets annually.
Davidson said on the positive side, unemployment was low.
"As long as people stay in work most people will be able to absorb a rise in interest rates. I don't think this will cause a melt-down, but it will require people to adjust," he said.
For those still trying to buy their first home, meanwhile, possible rate increases will add yet another barrier.
Owen Vaughan, editor of NZME-owned listing site OneRoof.co.nz, said first home buyers in Auckland and Wellington are often stretching their budgets so far there is little spare cash left over.
"Less than 50 Auckland suburbs have median property values under $1 million, and just two, Auckland CBD and Rakino Island, have values less than $600,000," he said.
"Five years ago, buyers could expect to pick up a home for less than $1m in more than 50 per cent of Auckland's suburbs."
It comes as the Herald's recent Home Truths series shone a spotlight on how unaffordable housing has become.
A typical Kiwi home now costs eight times the typical annual household income, while in Auckland it costs nine times incomes, CoreLogic and fellow analysts Infometrics said.
Financial publication Interest.co.nz's latest home affordability report says it takes a typical 25 to 29-year-old couple nine years to save a 20 per cent deposit on an $865,000 "affordable" Auckland home.
A Herald-Kantar poll last month found almost two-thirds of New Zealanders were so concerned by the challenges facing new buyers that they thought house prices should fall.
A new poll of 500 people commissioned by life insurer OneChoice had also just found that eight in 10 respondents (83.4 per cent) believe the dream of home ownership is no longer attainable for the average Kiwi.
That includes four in five (79.1 per cent) house hunters feeling locked out of the property market.
Loan Market mortgage adviser Bruce Patten said owner-occupiers and those first home buyers who did manage to buy could look to fix on 2-to-3-year interest rate terms if they wanted security and peace of mind.
Yet shorter terms were still at the lowest rates they had been in 20-years, he said.