First-home buyers are expected to face stronger competition to secure a purchase
Mortgaged investors are back in the property market, with a 25% share of purchases over the past three months.
CoreLogic’s latest Market Pulse report revealed that mortgaged multiple property owners (MPOs) have returned their market share to the highest level since the third round of loan-to-value ratio (LVR) changes in October 2016.
“The rise in market share is not just a case of mortgaged investors ‘holding on’ better than other groups in a soft market either indeed, the number of purchases by mortgaged investors over the past three months is about 400 higher than a year ago,” said Kelvin Davidson, senior property economist at CoreLogic.
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The mortgaged investors’ presence has been felt across New Zealand, including Auckland, Tauranga, Christchurch, and around the Wellington region – especially in Wellington City and Lower Hutt.
Hamilton saw the rise in the investors’ market share the most, with the percent share of purchases at 33% in Q3 compared to only 29% last year. Meanwhile, Dunedin saw a 24% share of purchases in Q3, up from 19% at the beginning of 2018.
However, Dunedin also saw a 13% increase in market share for cash investors in Q3, which was considered a two-year high but came in expense of first-home buyers (FHBs).
“Now admittedly, these may not always be genuine cash purchases, because in some cases the investor could have rejigged the debt on other properties in a portfolio to free up the capital for the latest purchase,” Davidson said. “Even so, it’s still an appreciable rise for investors, and again is likely to reflect higher yields (4.0%), worsening returns on other assets and in Dunedin’s case, still strong capital gains.”
“Overall, there have been signs in the past few months that we may now be witnessing the end of the purple patch for FHBs, at least in terms of market share, with investors stepping up again. This is not say that FHBs are suddenly about to abandon the market; just that they are now facing a bit
stronger competition to secure a purchase.”
