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Buyer classification not black and white

Investors’ share of Auckland property sales may have gone up recently, but the truth behind new data on multiple property owners is more complex than it first appears.

Tuesday, September 6th 2016, 12:00AM

by Miriam Bell

New CoreLogic buyer classification data shows that multiple property owners were responsible for 46% of Auckland property sales in the third quarter of 2016.

This is as compared to 44% in the second quarter of 2016.

CoreLogic senior research analyst Nick Goodall said there has been a slight increase in the multiple property owner share of the Auckland market, which was a continuation of a trend.

“If you take out Q4 2015 and Q1 2016, the trend can be seen before those quarters and then in Q2 and Q3 2016 it has continued on”, he said.

However, the third quarter data is preliminary data at this stage and there tends to be a correction in the multiple property owner figure later on as other data comes in, Goodall said.

“This is because the preliminary multiple property owner data includes people who may have bought a property but not yet sold their first one – despite intending to.”

Goodall doesn’t believe the announcement of the new LVRs in July would have had much of an impact on the buyer classification data.

But CoreLogic does look at other measures, including the number of pre-sale valuations being carried out by banks, he said.

“That data showed there was a two week in pre-sale valuations lift bang-on the announcement of the new LVRs.

“This was likely to be buyers finalising purchases before the LVRs come into effect, but we don’t know what group or groups of buyers were doing that. “

That rush was short-lived, as by August the number of pre-sale valuations being carried out by banks had dropped by 5% as compared to June.

NZ Property Investors Federation executive officer Andrew King didn’t think the new buyer classification data showed much of a change in market share as compared to the second quarter data.

He said that, at this stage in the property cycle, which is coming near the end, you would expect the investor share of the market to be quite high.

“It is likely to start coming back down. The looming LVRs might have pushed it to stay there for a while and then it will probably come down a bit after they come into force.”

King also pointed out that people who own two properties – for example, a house and a bach - would be classified as a multiple property owner in the CoreLogic data.

“That means that a lot of people who are not really investors and don’t consider themselves to be investors are included in that 46%.”

Meanwhile, commentators remain divided over what the long-term impact of the new LVRs will be on buyers, particularly investors.

In Goodall’s view, given the effect of the previous LVRs, the impact of the new LVRs is likely to be short-lived and smaller than anticipated.

Investor groups he has spoken to have indicated they will be exploring ways to keep investing, he said.

“However, they may change themselves. The market is getting so much attention and that creates a bit of second guessing among investors.

“If they are buying for capital growth but the market appears to be slowing down, investors might start to feel the level of capital gain they are likely to get is not worthwhile.”

It’s all about buyer confidence and mentality, Goodall added.

“We have started to see some impact from that and there could be more to come.”

« Auckland bucks listings trendUrgent housing debate derailed »

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Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.09 3.25 3.39
ANZ Special - 2.49 2.69 2.79
ASB Bank 4.45 2.49 2.59 2.65
Bluestone 3.49 3.49 3.49 3.49
BNZ - Classic - 2.49 2.69 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.09 3.29 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
Lender Flt 1yr 2yr 3yr
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online 2.50 1.99 2.35 2.45
Heretaunga Building Society 4.99 3.50 3.40 -
HSBC Premier 4.49 2.25 2.35 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 2.45 ▼2.45 ▼2.65
Kainga Ora 4.43 2.93 3.07 3.24
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.30 3.50 3.50
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.65 2.65
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
Lender Flt 1yr 2yr 3yr
SBS Bank 4.54 2.99 3.15 3.25
SBS Bank Special - 2.49 2.65 2.75
The Co-operative Bank - First Home Special - - - -
The Co-operative Bank - Owner Occ 4.40 2.49 2.69 2.79
The Co-operative Bank - Standard 4.40 2.99 3.19 3.29
TSB Bank 5.34 3.29 3.29 3.59
TSB Special 4.54 2.49 2.49 2.79
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 3.09 3.29 3.39
Westpac - Offset 4.59 - - -
Westpac Special - 2.49 2.69 2.79
Median 4.55 2.94 3.07 2.80

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