Wellington has become the country's biggest urban market for first-home buyers, as investors struggle to meet tighter mortgage criteria.
Data prepared for Westpac by property data firm CoreLogic shows first-home buyers made up almost 29 per cent of all sales in the Wellington market last year.
"Anything over 20 per cent is good and in Auckland, for example, it's sitting at 21 per cent, so we're way above the average," Cat Feaunati, Westpac's head of consumer banking for the central region, said.
Ramaiah said getting together an adequate deposit wasn't easy, even on a doctor's salary.
ROSS GIBLIN/ FAIRFAX NZ
Ramaiah said getting together an adequate deposit wasn't easy, even on a doctor's salary.
She said first-home buyers in the capital had seized their chance to get on to the property ladder, backed in many cases by solid jobs in government, education or ICT.
Investors had been equally active, but were struggling to meet new bank mortgage rules demanding a 40 per cent deposit.
Wainuiomata is regaining popularity for affordable pre-1980s three and four-bedroom homes.
SUPPLIED
Wainuiomata is regaining popularity for affordable pre-1980s three and four-bedroom homes.
First-home buyers still had an uphill battle, however, with Wellington house prices rising more than 20 per cent in the past year.
Six suburbs have emerged as first-home buyer "hotspots", and they show a clear trend towards the outer suburbs.
Trentham, Whitby and Titahi Bay became popular as inner-city suburbs such as Newtown and Kilbirnie became more expensive.
Traditional first-home buyer areas such as Stokes Valley, Wainuiomata and Tawa also remained popular.
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Feaunati said it showed a new generation of home buyers were not giving up on the "Kiwi dream" of three bedrooms and a backyard.
They were cashing up their Kiwisaver, being helped by parents, or returning from overseas with a few savings.
Travel times seemed to be less of a concern now. "Forty-five minutes is pretty much an average commute in any major city anywhere in the world," she said.
"Younger couples working in Wellington city perceive Horowhenua and Wairarapa as viable commuter options."
STEEP DEPOSIT
One recent first-home buyer, Ravi Ramaiah, of Woburn, Lower Hutt, said he wasn't sure how buyers were managing to stay ahead of rising prices.
Ramaiah, a doctor from Britain, started house-hunting after spending a year here to see if he wanted to stay permanently.
He found New Zealand rental properties cold and, after gaining permanent residency, he and his wife set out to find a property last winter.
Getting an adequate deposit wasn't easy, even on a doctor's salary. A flat in Britain and savings were "the saving grace for me, and a couple of friends here helped me out to bridge that gap".
But he was unsure how other first-home buyers afforded the steep 20 per cent deposit now required by banks.
Ramaiah bought at the higher end of the market because he intends to stay in Lower Hutt for a long time.
"Because I've travelled so much we wanted to settle down ... We're committed to stay for the next 10, 15, 20 years."
THRIFT FACTOR
CoreLogic senior researcher Nick Goodall said thrift was a major factor for first-home buyers, who paid below the median value of all properties in all six hotspots.
Feaunati said investors often competed for the same properties as first-home buyers. But the new players had been undeterred, probably to ensure they made the most of historically low interest rates.
In terms of sales, the favourite and most affordable suburb for first-home buyers last year was Wainuiomata.
The average sale price for first-home buyers was $275,000, and they commanded about 41 per cent of total sales.
HOTSPOTS
But Newlands was the suburb where first-home buyers proportionately held their biggest foothold. Forty-five per cent of all sales were to new entrants, who paid an average of $454,000.
The newest hotspot for first buys was Porirua's Titahi Bay, a seaside suburb where 1950s houses were particularly popular.
There, first-home buyers commanded 43 per cent of last year's sales, an increase in market share of nearly 10 per cent.
Standalone houses were most popular, but in Johnsonville a quarter of first-home sales were flats.
WHERE FIRST HOME BUYERS ARE FLOCKING:
1 Newlands, Wellington: 65 sales (45 per cent of all sales, up from 44 per cent in 2015)
Median value of all properties in the suburb: $536,000
Average sale price for first-home buyers in 2016: $454,000
2 Titahi Bay, Porirua: 72 sales (43 per cent, up from 34 per cent).
Median value: $405,000
Average first-home buyer sale price: $366,000
3 Stokes Valley, Lower Hutt: 99 sales (42 per cent, up from 41 per cent).
Median value: $353,000
Average first-home buyer sale price: $324,000
4 Wainuiomata, Lower Hutt: 134 sales (41 per cent, up from 39 per cent).
Median value: $300,000
Average first-home buyer sale price: $275,000
5 Tawa, Wellington: 86 sales (37 per cent, down from 39 per cent).
Median value: $537,000
Average first-home buyer sale price: $452,000
6 Johnsonville, Wellington: 77 sales (36 per cent, down from 40 per cent).
Median value: $559,000
Average first-home buyer sale price: $491,000
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