Feilding couple Emma Kinzett and Adam Laker are delighted with their first home, which gives them a lifestyle they would struggle to afford in Auckland, Wellington, or maybe even Palmerston North.

They bought their two-bedroom, 1960s-style home 18 months ago, having tired of renting and paying someone else's mortgage.

Read more: House buyers flock to snap up homes

Sitting just below the latest average sale price for Manawatu, at $240,000, their home is in a sought-after category for first-home buyers.

Their choice of Feilding was made when they were renting, and struggled to find somewhere suitable in the city.

Once introduced to the town, they decided it was where they wanted to live, and discovered they could get more for their money when they came to buy.

In a home neatly decorated, with a recently-renovated kitchen and bathroom, well-insulated and with a garden that they, the dog and the chooks all enjoy, the young couple in their 20s believe they can live better for less than their contemporaries in other cities.

They have benefited further from falling interest rates.

Next year Mr Laker plans to go back to studying, and the mortgage will be manageable on one income.

"We're careful with our money," said Ms Kinzett. "But we probably would not be able to do that with a mortgage in Auckland."

BANKS OUT TO ENTICE

Aggressive marketing from banks and record low interest rates are helping the buoyant property market.

In the past month Kiwibank, TSB, BNZ and Westpac have cut their mortgage rates by between 10 and 30 base points.

Other banks are trying to entice customers to their fixed mortgage rates by giving away a range of freebies.

ASB is giving away a Samsung Galaxy Tablet and $1000 cash, and TSB is offering to contribute $1000 towards legal fees as well as a Visa card loaded with $500.

Massey University's Professor Bob Hargreaves said the war for customers was not much of a surprise.

"Banks are always wanting to grab market share off competitors."

But low interest rates were helping, he said.

"Around the world, interest rates are at historical lows.

"It's all to do with the global financial crisis - governments have been bringing interest rates down to encourage economic activity, and it hasn't really happened."

Interest.co.nz publisher David Chaston said banks had not been this aggressive since the property boom in 2007.

But while banks concentrated on offering good loan-to-value ratios then, they were now having to adjust to the new market.

"Back then it was all growing, with an increasing number of houses for sale."

The market had slowed and banks were used to making big profits, so using giveaways along with cut rates was now the way to get new customers, he said.

"Banks will put their arm around you and try to offer a good deal across everything."

Although customer surveys showed people were satisfied with their banks, Mr Chaston said that did not convert into loyalty, and people would move away from their bank if the offers were good enough.

- © Fairfax NZ News