Kiwis wanting to climb the property ladder could be in luck, with the market beginning to turn in favour of "trading up", real estate data company CoreLogic says.
It comes as house prices continue to fall, dropping by about 3 percent this quarter.
Concerned about rising inflation, the Reserve Bank (RBNZ) has moved to hike interest rates to levels not seen since 2015 - contributing to falling house prices.
Currently, the official cash rate (OCR) sits at 3 percent. On October 5, when the monetary policy committee next meets, the RBNZ was expected to increase the OCR again.
As a result, major banks have predicted house prices would fall by 10 percent or more by the end of the year.
But in its Market Pulse report released on Wednesday, CoreLogic pointed to a potential silver lining of the housing market downturn.
Figures showed the gap in median values between three and four-bedroom homes was starting to drop in the likes of Dunedin, Wellington City, Manukau, Waitakere and Auckland City.
CoreLogic chief property economist Kelvin Davidson said that data suggested conditions were starting to turn in favour of "scaling up".
"Clearly, it still involves quite a bit more equity (and presumably debt in many cases too) to move from a three- to four-bedroom property in most parts of the country," he said in the report. "That said, it wouldn't be a surprise to see the trade-up gap generally continue to shrink in the coming months - given any particular percentage fall across the market as a whole translates into a bigger dollar fall on higher value stock.
"In other words, that will make trading up a little easier, especially with more listings and choice now available too."
CoreLogic data from June last year showed nationwide, the gaps between a three and four-bedroom house were at least $150,000 in New Zealand's main centres.
Having crunched the numbers, CoreLogic said things were looking more positive a year on.
In Dunedin, for example, scaling up from three bedrooms to four would require $154,000 - down from $156,000 a year ago. That's the smallest trade-up premium in New Zealand, according to CoreLogic.
"Last year's momentum has certainly vanished, with all key areas seeing a smaller rise in the trade-up premium over the past 12 months than in the previous period - consistent with the change in wider market conditions we've seen lately," Davidson said.
"The margin is still about $400,000 or more in areas such as Auckland City and Manukau, but at least it's fallen."
Meanwhile, a new survey by independent economist Tony Alexander for the Real Estate Institute of New Zealand suggests the market was also beginning to turn back in favour of first-home buyers.
Of the real estate agents surveyed, 5 percent said they noticed more first-home buyers in the market. That was the first time there had been a noticeable increase in first-home buyers in a year, Alexander said.
"These young people face a choice; continue to stand back from the market hoping to catch the last few percentage points of the decline in house prices on average, or take advantage of the doubling of listings from a year ago and willingness of vendors to negotiate to secure a home in which to raise a family.
"The relatively sharp improvement in this measure suggests a firm focus back on purchasing for family reasons rather than tactical cycle playing is underway."
