Is this the return of the property investor?

After a quiet few years, property investors are getting back into the market, property research firm Corelogic says.

It has released its latest data, which shows first-home buyers remained at record levels in October, with 28 percent of all purchases.

But investors made up another 23 percent of the market, a significant increase from 20 percent earlier in the year. It is their highest market share since the first quarter of 2021.

Corelogic economist Kelvin Davidson said there were a number of factors working in investors' favour.

Falling mortgage rates, easing loan-to-value restrictions, the return of mortgage interest deductions and the reduction in the bright-line test would help them, he said.

"A top-up is still required when buying a typical rental property to keep the cashflow going but it's less than it was and people may be looking forward to next year thinking mortgage rates will come down further and the gap will close."

He said lower term deposit rates on offer at the banks might also be prompting people to think about what else they could do with their money.

Davidson said the investor comeback was notable in Auckland, where prices had fallen quite significantly and people were able to buy new properties at a possible discount.

"Rental yields might be looking better."

Auckland Property Investors Association general manager Sarina Gibbon said investors were increasingly confident, because of a stronger-than-expected economic landscape, sustained rental demand and anticipated rate cuts

"The proposed tenancy law changes, particularly the return of 90-day no-fault termination alongside stronger protections against retaliatory termination, present a more balanced framework that will help landlords de-risk their investments.

"Overall, we're optimistic about the market as these changes should create a more confident and well-functioning rental sector."

NZ Property Investors Federation spokesperson Matt Ball said interest deductibility returning was an important factor.

He agreed with Gibbon that the law changes would improve confidence among investors that they could deal with bad tenants.

"People who invest in residential rental property tend to buy and hold long term, seeking to increase value over time. So our members are looking for properties of all types, at an affordable price and with some scope for them to add value. For example, one of the finalists in our Renovation of the Year award who bought a large old property near Southland Hospital and fully renovated it into two four-bedroom homes, adding value and increasing the housing supply."

Davidson said it was notable that the increase in investor activity had not come at the expense of first-home buyers.

"Sometimes there's a perception that it can only be one or the other. But we need both first-home buyers and investors to have a solid presence in the market, so the latest figures are encouraging."

Moving owner-occupiers have been less active than normal.

Davidson said many people were cautious and "housing chains" - where the sale of one property was dependent on the sale of another - had got longer.

"You hear anecdotes that normal might be three deals that need to fall in line before someone can move and it's up at six or seven."

That was likely to create some pent-up demand from people who needed to move at some point, he said.,

The data shows New Zealand's property stock is now worth $1.61 trillion and 43 percent of household assets are in residential real estate.

The total number of properties for sale is high by the standards of previous years. New listings have continued to exceed slowly rising sales volumes.

"The abundance of listings on the market is providing buyers with significant choice, allowing them to take their time and negotiate favourable deals," Davidson said.

"This buyer caution is reflected in the Corelogic Home Value Index, which has recorded eight consecutive months of decline, with national property values now 18 percent below their post-Covid peak."

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