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Source: MIL-OSI Submissions
Source: CoreLogic

More than half of property purchases in the third quarter of the year were made by either mortgaged investors or first home buyers (FHBs), with existing owner-occupiers still pretty quiet. In fact, the share going to FHBs of 25% was their highest figure on record, surpassing the previous peak of 24% in 2006-07 – KiwiSaver withdrawals remain one important factor in their ability to stay active in the market.

With September’s figures now available, the CoreLogic Buyer Classification series* for Q3 is complete and it confirms that mortgaged investors (multiple property owner/MPO) and first home buyers have increased their market share, while movers (i.e. relocating owner-occupiers) remain relatively quiet – in some cases because the shortage of listings means they can’t find the next property to move to.

As the first chart shows, mortgaged investors had a 26% share of purchases in the third quarter, the highest figure since 28% in Q3 2016 (just prior to the introduction of the 40% deposit requirement by the Reserve Bank). In addition, the rise in market share for mortgaged investors isn’t just because they’ve ‘held on’ while other buyer groups have made fewer purchases – in fact, the number of deals done by mortgaged investors in the third quarter was more than 20% higher than a year ago. Their activity levels were already rising pre-COVID, but this trend has just been reinforced in the past six months by reduced interest rates and the temporary removal of the LVR rules.

Meanwhile, the share of purchases made by first home buyers (FHBs) rose to 25% in Q3, the highest figure we’ve seen in the 15-year history of this time series. FHBs have obviously also benefitted from low mortgage rates, while a willingness to switch from standalone dwellings to instead purchasing an apartment or townhouse has helped too. But FHBs have also been tapping their KiwiSaver funds, with more than 44,300 withdrawals for first home purchase in the year to March 2020**, up from about 39,600 the previous year.