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Investor juggernaut slowly grinding down

Property buying by mortgaged investors is back down to the levels just before the loan-to-value restrictions were lifted in the second quarter last year, which sparked investor demand back into life.

Friday, October 22nd 2021, 12:05PM

CoreLogic’s Buyer Classification figures for September show a clear downwards trend for mortgaged investors, who now have a market share of 24.2%.

Chief CoreLogic economist Kelvin Davidson says with LVRs now back in play and with the phased removal of interest deductibility on the table too, there is a good chance that mortgaged investors’ market share will continue to drop.

And potentially it could reach an even lower level than the late 2017 trough of 22%.

“It’s clear to see where the pullback has come from.

“The dip in market share is concentrated amongst smaller players, ie those who would have been making their first investment purchase – and would hence own two properties – and those who already have one to two rentals and would be buying another.

“We suspect these smaller investors tend to have the greatest difficulty in raising a 40% deposit and/or [are] the most uncertain about the true effect of the interest deductibility changes, and have started to retreat a little.”

On the flipside, says Davidson, first home buyers’ (FHBs) market share has picked up strongly, reaching 26.4% in the September quarter, which is a new record high.

“The announcement of planning system reforms, which allow and encourage higher density housing, should also benefit FHBs,” he says.

“It’s hard to say if an extra (roughly) 50,000-100,000 dwellings as a result of the reforms will lower house prices, but it will certainly tend to restrain their growth.

“The major issue will be who’ll actually build them. After all, the construction industry is already at capacity.”

Davidson says there still seems to be some pretty strong financial incentives to make the move into home ownership, given that paying a mortgage can often still be cheaper than renting, especially since rents have started to rise more quickly.

“Supply and demand is tight in the rental market, and landlords may well be trying to ‘get ahead’ of looming mortgage rate rises too.”

Davidson adds the interest deductibility changes do seem to be causing faster rent rises than expected, although wages will be an anchor for rental growth over the long run.

Meanwhile, movers – ie existing owner occupiers who are shifting house – are still relatively quiet around the country, with Wellington a notable example.

“In some cases, already-large mortgages may be preventing them from actually making the next move, given the large gap in price to ‘trade up’,” says Davidson.

“But for others, it’s likely due to the lack of listings and simply not being able to find the ideal next property.”

Tags: CoreLogic first home buyers house prices housing market housing shortage housing supply LVR mortgaged investors

« FOMO haunts property buyersAuckland housing crisis nearly over »

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.24 6.75 6.65
ANZ 8.64 7.84 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.24 6.79 6.65
ASB Bank 8.64 7.24 6.75 6.65
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - 7.24 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 7.84 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 7.04 - -
Co-operative Bank - Owner Occ 8.40 7.24 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 7.74 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.69 6.45 6.19
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 6.75 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 8.25 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - 7.25 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 7.84 7.45 7.25
SBS Bank Special - 7.24 6.85 6.65
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 6.74 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 8.04 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 7.24 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - - 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.35 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.75 6.65
Median 8.64 7.29 7.32 6.65

Last updated: 8 April 2024 9:21am

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