There has not yet been any large sell-off of investment property. Photo: RNZ / Nate McKinnon
Mortgaged investors have backed away from the housing market, with record numbers of first-home buyers (FHBs) and investors with cash picking up the slack.
CoreLogic NZ's latest buyer classification data indicated low yields, high mortgage rates, high deposits and interest deductibility changes were deterring mortgaged multiple property owners (MPOs).
MPOs' share of the market shrunk to a record low of 19.9 percent in April, while cash investors accounted for a record 16.1 percent and FHBs 25 percent, also a record.
CoreLogic NZ chief property economist Kelvin Davidson said mortgaged MPOs still have a higher market share than investors with cash, but they were in a relatively weak position given the current market conditions.
"The 40 percent deposit requirement (LVR) has also been a hurdle, however, the prospect of that loosening to 35 percent from 1 June should provide some slight relief, but not significantly."
He said there was typically a shift in sentiment when the LVR dropped below 40 percent.
Kelvin Davidson Photo: supplied
"When it gets below that there's a little bit more leeway. I don't think we'll suddenly see mortgage investors bounce back massively, but that's a little bit of help for them. And you could see a few more into the market."
Meanwhile, he said there had not been any large sell-off of investment property.
"We're not seeing existing MPOs sell off to any great degree, it's just that it's become much harder to make the sums work on a new investment purchase, or grow an existing portfolio."
Overall sales volumes remained low in April, with buyers taking their time and few vendors finding themselves in a forced selling position.
The flow of new listings coming onto the market each week was also sluggish.
"The total stock of listings available on the market is continuing to drop, as sales activity, although still low, is tending to outweigh new listings flows," Davidson said.
"Winter is expected to remain sluggish per the seasonal norm, so spring will really be the key period to watch for the property market.
"It still seems likely that this downturn is on its last legs, albeit not quite finished yet."
House sales for the year ended April were down about 31 percent on the year earlier, while values fell 10 percent.
Over the four weeks ending 7 May 2023, there were 6778 new listings, down 23 percent on the same period last year.
Wellington was the weakest of the main centres, with values down 21 percent from the peak, while Christchurch was down 6.2 percent.
Davidson said rental affordability was stretched in most markets, keeping rent increases in check.
"That's probably the key restraint on rental growth even though landlords' costs are going up."