Investors versus first-home buyers: Who is dominating the market?

by Roxanne Libatique14 Jan 2021

The housing market remains alive despite soaring prices across New Zealand – and property investors are dominating the market as they made the most significant share of purchases in December 2020, according to CoreLogic.

CoreLogic’s latest Buyer Classification data has revealed that mortgaged “multiple property owners” accounted for 27% of purchases, while multiple property owners buying with cash accounted for a further 12%. Mortgaged investors accounted for most purchases in Auckland, Dunedin, and Hamilton, with investors dominating the Hamilton market where they had a 37% market share.

Meanwhile, first-home buyers’ market share dropped to 23% in December. However, they had the most significant market share in the Wellington region and Christchurch.

CoreLogic head of research Nick Goodall pointed to a noticeable increase in sales to mortgaged investors in recent months, with the recent 27% share just shy of the 28% share in the third quarter of 2016.

“Back in 2016, when it was clear that investors’ share of the market was getting too high and too fast, the Reserve Bank acted and imposed the 40% [deposit] requirement for investors. This move saw their share subsequently drop to 25% in the next quarter and, ultimately, as low as 22% in the last part of 2017,” Goodall said, as reported by Stuff.

CoreLogic’s latest data also highlighted concerns that the government’s tenancy law reforms did not stop investors from buying property.

NZ Property Investors Federation executive officer Sharon Cullwick said the situation would be different if the lending environment had not changed so much in response to COVID-19, as many investors would have left the market.

“As it is though, we are seeing lots of new investors coming on to the market, either for the first time or returning after being out. It’s because they have equity in their homes, they are looking for good returns which they can’t get from term deposits, and finance is cheap,” Cullwick said, as reported by Stuff.

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