Source: MIL-OSI Submissions
Existing owner-occupiers are largely staying put at present, with first home buyers and especially mortgaged investors raising their market shares (as well as the number of purchases). At 27% in July, the share of purchases going to mortgaged investors was the highest in four years, and shows that their appetite remains pretty strong, even despite government policy measures over the past few years that have raised the costs of being a landlord. Provided that the current move to level 2 & 3 is short-lived, there’s little reason to expect these buyer patterns to change in the near term.
NZ’s housing market has clearly been through some significant disruption in recent months and unfortunately there’s more to come. As the first chart shows, 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 (especially in Auckland).
However, it’s not only the number of property transactions that has seen significant shifts in recent months, but also the percentage market shares for various buyer groups. Indeed, according to the CoreLogic Buyer Classification series, movers’ (i.e. existing owner-occupiers who are relocating) share of purchases dropped from 28% in Q1 2020 to 27% in Q2, and has started Q3 on an even softer note – down to just 24% in July (see the second chart). As we’ve noted before*, due to factors such as already-high debt levels and/or fear about finding the ideal next property in a listings-constrained market, many would-be movers are sitting tight at present.