At CoreLogic one of our flagship data series is Buyer Classification, which looks at every property transfer across the country and classifies them according to purchaser group (e.g. first home buyer, investor), property type/age, size of portfolio etc. This is of particular interest at present, given the significant changes to the regulatory environment we’ve seen so far this year (and possibly more to come yet, e.g. debt to income ratios). So what’s been happening in the data lately?
First, on the back of the 40% deposit requirement that was made official on 1st May (but enacted earlier by the banks), the share of purchases being made by mortgaged investors has tailed off pretty sharply – from a sustained (and record) peak of 29% in each of January, February, and March, to less than 24% in July. That’s broadly the lowest level seen for two years, and it won’t need to fall much further to match previous troughs of 22% in 2017, in the aftermath of the last time investors faced a 40% deposit requirement (from October 2016). Given extra measures, this time around, e.g. phased removal of interest deductibility, that previous low of 22% could be ‘beaten’.
Meanwhile, first home buyers (FHBs) have made a strong comeback. After their market share dipped to just 22% in March (down from 27% in August last year), it has since rebounded to 27% again – as they continue to use KiwiSaver for the deposit or part of it, compromise on property type/location, and often make use of the LVR speed limits too (to enter with less than a 20% deposit).
So these shifts in buyer patterns would be exactly what the Government wants to see, albeit potentially not much comfort to those who still can’t...
