The housing market has “roared back to life” after lockdown according to ASB economist Mike Jones, with first home buyers and investors leading the surge.
Jones notes that total mortgage lending in August 2020 had risen by 26% on the previous year, and the figures show that investors and first-home buyers have been keeping their advisers the busiest. New lending to first home buyers hit a new high in August, reaching 20%, and lending to investors is currently at 21%.
Lending to existing owner-occupiers still takes the largest share in mortgage lending, though it has fallen from 64% to 58% over the past 18 months.
When looking at the LVR of borrowers, figures show that high-LVR lending has grown in the three months since lockdown and is at around 18% of total lending.
“What is interesting is that the segment experiencing by far the largest growth in high-LVR lending, relative to the same period last year, is investors,” Jones commented.
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“Relative to the same period last year, growth in new lending to the high-LVR investor segment for the three months to August is up 134%.”
“We’ve also dug into regional housing activity data to examine more closely where the hot spots are,” he continued.
“One way to assess this is to look at the pace at which houses are selling. Relatively speaking, Auckland, Nelson, Waikato, and Canterbury come out on top here.”
Despite this, Jones noted that house sales can often be held back by low numbers of listings. Looking at the ratio of sales to listings, Jones says that all markets are currently “tight” – even those like Otago, which were hit particularly hard by COVID-19.
“Wellington, Waikato, and Nelson are currently the tightest markets in the country,” Jones said.
“As we have illustrated in last week’s Home Economics, these regions have, unsurprisingly, tended to outperform in terms of house price inflation since February. They will likely continue to do so in the short term. The Northland and Southland markets, while still tight in an absolute sense, occupy the opposite end of the spectrum.”