Why First Home Buyers and Investors Can Feel Hopeful
- Staircase Financial
- Dec 25, 2025
- 5 min read
A Staircase perspective on the SAI and the improving affordability landscape
For several years, both first home buyers and property investors have been weighed down by a shared belief that buying property has become almost impossible.
Headlines have reinforced that feeling, and many households have absorbed a story of shrinking opportunity. A recent national survey showed almost half of non home-owners had given up hope of home ownership entirely.
Yet the data that actually measures affordability tells a very different story. This data reveals 2025 has delivered the strongest improvement in property affordability in more than four years.
The significant improvement is already visible in the Staircase Affordability Index (SAI), which shows that conditions for buyers are significantly better than most people realise.
The SAI is the clearest measure of serviceability because it reflects what buyers actually face: the percentage of median household income needed to service an 80 percent mortgage at current two year fixed rates.
It cuts through guesswork and reveals the real pressure on household budgets. In 2025 the pressure has eased faster than many expected.
This improvement is not only good news for first home buyers. It also matters greatly to investors, because the same inputs that improve buyer affordability also strengthen the numbers that drive investment decisions.
Affordability has improved meaningfully in 2025
Lower mortgage rates have been the main turning point. Two year fixed rates have fallen sharply from their 2023 highs as inflation has retreated and bank competition has increased. At the same time, median property prices have stabilised rather than surging, and incomes have continued to edge upward.
These combined factors have pushed the SAI to its most favourable level since 2021.
The share of income needed to service a mortgage has fallen enough to pull many households back into a workable range. For some, the improvement is the difference between a dream and a realistic plan.
For investors, the improvement has been equally meaningful.
Lower interest costs reduce holding expenses, strengthen cashflow, and improve serviceability for new lending. When combined with stable prices and persistent rental demand, the investment numbers are stronger than they have been in several years.
A clear shift is already visible in buyer behaviour
Early signs of change are emerging in the data.
First home buyers have begun increasing their share of purchases, which typically occurs early in a recovery cycle. They respond quickly to lower rates and more stable prices.
Investors are also re engaging. Many paused through the toughest part of the cycle, waiting for clearer signals. Now that affordability metrics have shifted and holding costs have eased, more investors are finding that properties which did not stack up two years ago now look materially better.
Improving serviceability and steady rental demand create a more workable environment for new acquisitions.
Many buyers and investors do not realise how much things have changed
The RNZ survey shows the emotional environment clearly.
Many people still carry the weight of the hardest years in their thinking. But emotions lag data.
In reality, a wide range of households who assume they cannot enter the market are now closer than they think.
Investors who previously ran the numbers and walked away would get very different results if they revisited those calculations today.
The SAI is a little like a waterline that reveals the true direction of the tide. Even while the waves move in and out, the undercurrent is already shifting.
Improved affordability is strengthening investment numbers
The improvement in the SAI does not only help buyers trying to enter the market. It also directly improves investment viability.
For investors, the environment is improving through:
lower interest costs on new and existing lending
improving rental demand
stable property prices that reduce short term risk
lower financing pressure relative to rent levels
improved gross to net return dynamics
For many investors, the numbers that looked marginal in 2023 are now firmly within workable territory. Reduced mortgage outgoings expand the range of viable options and reduce the risk of cashflow strain.
The opportunity window is wider than many realise
The SAI shows that affordability has improved faster than public sentiment. Prices remain contained, mortgage rates are easing, and both first home buyers and investors are reappearing in the data.
The current environment offers a rare window where:
serviceability is improving
prices remain stable
lending conditions are loosening
buyer activity is rebuilding from a low base
Cycles never remain in this phase for long, and those who update their thinking early tend to benefit most.
What this means for the next year
For first home buyers, manageable repayments are becoming achievable again as financing costs fall and incomes continue to rise.
Staircase helps you navigate these shifts with practical, data grounded guidance. When affordability improves this quickly, the greatest risk is standing still.
Summary
The improvement in the SAI throughout 2025 is not a small adjustment. It is a meaningful turning point for first home buyers and property investors alike.
The data shows that affordability has strengthened, financing pressures have eased, and the numbers now support a more optimistic outlook than most people realise.
For anyone considering a move, the key is to understand the market as it is today, not as it felt during the toughest years of the cycle.
Staircase can help you assess your position and explore the options that are opening up in this improving environment. Book a free consultation with the team to understand your options today.
Frequently Asked Questions (FAQ)
What is the Staircase Affordability Index (SAI)?
The SAI measures how affordable it is to buy property by calculating the percentage of median household income needed to service an 80% mortgage at current rates. It reflects real-world serviceability conditions for buyers.
Why has property affordability improved in 2025?
Affordability has improved due to falling mortgage rates, stabilised property prices, and rising household incomes. These shifts have made it easier for both first home buyers and investors to enter or re-enter the market.
Is now a good time to invest in property?
Many investors are returning to the market as financing costs drop and rental demand remains strong. The current conditions offer improved cashflow, reduced risk, and more workable lending options.
Are first home buyers really in a better position?
Yes. The combination of stable prices, lower rates, and improved serviceability means more first home buyers are finding it feasible to buy, often sooner than they expected.
What should I do if I’m unsure whether I can afford to buy?
Consider using tools like the SAI or speaking with a property expert at Staircase. Even if you’ve run the numbers before, rechecking them with today’s conditions could reveal new possibilities.
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