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Investors' market share on the rise

Concerns about the rising costs of being a landlord aren’t deterring investors with new data showing that mortgaged investors’ share of purchases surged to a four year high in July.

Thursday, August 20th 2020, 1:42PM 2 Comments

by Miriam Bell

CoreLogic's Kelvin Davidson

There’s no doubt that mortgaged investors are a rising presence in the market, with CoreLogic’s latest Buyer Classification data showing they accounted for 27% of purchases in July.

That share of the market is their highest since the third quarter of 2016 – when the Reserve Bank imposed a 40% deposit requirement* on investors.

While mortgaged investors share of property purchases increased, existing owner-occupiers share of purchases dropped to 24% in July.

First home buyers (FHBs) share of purchases also held up, edging higher to 24% in July.

CoreLogic senior property economist Kelvin Davidson says the data shows investors’ appetite remains pretty strong - despite government policy measures which have raised the costs of being a landlord.

“Provided that the current move to alert levels three and two is short-lived, there’s little reason to expect these buyer patterns to change in the near term.”

Those national patterns were replicated in Auckland, with existing owner-occupiers’ market share dropping lately, but the figures for mortgaged investors and FHBs continuing to improve.

Dunedin is another clear example of the continued appetite of mortgaged investors, Davidson says.

“Indeed, they got off to a very fast start in the third quarter, accounting for 36% of purchases in July, as well as a higher number than a year ago.

“This is a pretty notable result, especially given some signs of weaker property prices (which might ordinarily make investors cautious) as well as still-restrained lending policies at the banks.”

Investors may have issues with recent policy and legislative changes, but Davidson says that if you look at the investment alternatives, property still seems like a good option.

“It seems that many property investors might just opt to leave their money in property and wear the extra costs.”

When it comes to a broader outlook, Davidson says New Zealand’s housing market has clearly been through some significant disruption in recent months and, unfortunately, there’s more to come.

“Sales volumes in June and July had rebounded strongly from the earlier collapse, but we’re now likely to see activity drop off again on the back of the latest move up the alert levels.”

Looking ahead, after a period where optimism had returned, there will now be a new phase of uncertainty and downside risks to property market activity, if not prices too, he adds.

“That said, the two-week extension of the wage subsidy (to 15th September) and the same for the mortgage payment deferral scheme (to 31st March next year) should both help to soften the blow.”

* In the wake of Covid-19, the Reserve Bank has temporarily removed the LVR restrictions until at least May next year.

Tags: Auckland CoreLogic house prices housing market investment Lending LVR market outlook mortgage holiday mortgages property investment RBNZ regulation Reserve Bank wage subsidy

« Election not an issue for property buyers & sellersClouds remain over housing market »

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Comments from our readers

On 21 August 2020 at 11:09 am davidho said:
So much for the scaremongering regarding the new Tenancies Act. Its about time we saw less of a vested interest commentary from the various landlord groups. By the way I have several residential rental properties and I am happy to have them compliant with excellent client relationships.For those that find it too tough, sell and try getting a 80% bank loan to buy a parcel of shares and achieve tax free capital gains that of course get little mention.
On 21 August 2020 at 6:49 pm Property Leader said:
I do laugh and scoff at predictions of Property prices Doing this and that. Being in the market is everything. The bigger the portfolio the easier it is to buy more rentals. The government laws and tax moves are all playing into my hand.

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 5.44 - - -
AIA - Go Home Loans 7.99 5.99 5.69 5.69
ANZ 7.89 6.59 6.29 6.29
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 5.99 5.69 5.69
ASB Bank 7.89 5.99 5.69 5.69
ASB Better Homes Top Up - - - 1.00
Avanti Finance 8.40 - - -
Basecorp Finance 9.60 - - -
BNZ - Classic - 5.99 5.69 5.69
Lender Flt 1yr 2yr 3yr
BNZ - Mortgage One 7.94 - - -
BNZ - Rapid Repay 7.94 - - -
BNZ - Std 7.94 5.99 5.69 5.69
BNZ - TotalMoney 7.94 - - -
CFML 321 Loans 6.20 - - -
CFML Home Loans 6.45 - - -
CFML Prime Loans 8.25 - - -
CFML Standard Loans 9.20 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 5.79 - -
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Owner Occ 7.65 5.99 5.75 5.69
Co-operative Bank - Standard 7.65 6.49 6.25 6.19
Credit Union Auckland 7.70 - - -
First Credit Union Special - 6.40 6.10 -
First Credit Union Standard 8.50 7.00 6.70 -
Heartland Bank - Online 7.49 5.65 5.55 5.55
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 6.75 6.40 -
ICBC 7.49 5.99 5.65 5.59
Kainga Ora 8.39 7.05 6.59 6.49
Kainga Ora - First Home Buyer Special - - - -
Lender Flt 1yr 2yr 3yr
Kiwibank 7.75 6.89 6.59 6.49
Kiwibank - Offset 8.25 - - -
Kiwibank Special 7.75 5.99 5.69 5.69
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 8.44 5.95 6.09 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 7.99 6.95 6.29 6.29
SBS Bank Special - 6.15 5.69 5.69
SBS Construction lending for FHB - - - -
Lender Flt 1yr 2yr 3yr
SBS FirstHome Combo 5.44 5.15 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.75 - - -
TSB Bank 8.69 6.49 6.49 6.49
TSB Special 7.89 5.69 5.69 5.69
Unity 7.64 5.99 5.69 -
Unity First Home Buyer special - 5.49 - -
Wairarapa Building Society 8.10 ▼6.05 5.79 -
Westpac 8.39 6.89 6.39 6.39
Westpac Choices Everyday 8.49 - - -
Westpac Offset 8.39 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 6.29 5.79 5.79
Median 7.99 6.02 5.79 5.69

Last updated: 8 November 2024 2:46pm

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