The CoreLogic Buyer Classification data shows that mortgaged multiple property owners (MPO), including investors, have been relatively quiet lately, accounting for just 21% of property purchases in the third quarter of 2023 – versus a long-term average of 25%. In Auckland, the Q3 figure was 24%, versus its average of 27%.
As it turns out, it’s MPO-2’s (someone who now owns two properties after their latest purchase, e.g. the house they live in and their first investment) and MPO 3-4’s that have seen their share of activity drop the most. From a peak share of 9% in early 2021, mortgaged MPO-2s now account for about 6% of purchases, while MPO 3-4’s are down from 7% to less than 5%. By contrast, the share for MPO-10+ has been fairly steady at 3-4%. The same broad pattern applies in Auckland, too.
In other words, it’s the cliched ‘Mum and Dad’ investors, perhaps those buying their first or second rental property, who have pulled back the most – either by choice (perhaps becoming more nervous or opting for, say, a term deposit instead) or having it forced upon them by changed lending criteria around deposit or serviceability requirements.
Certainly, it’s quite difficult to get the sums to stack up on a ‘standard’ existing rental property purchase at present, with gross yields low and mortgage rates high, deposit requirements sitting at 35%, and no deductibility of mortgage interest. Indeed, the negative gap between yields and mortgage rates currently sits at its worst/highest level in around 15 years – meaning large cash top-ups from other income sources are required.
That said, there’s now probably a ‘line in the sand’, given the shift towards the centre-right at the latest election and the looming changes to property tax rules – namely, a...
