Residential sales numbers up five months running
While the outcome of the general election was anticipated to draw a “line in the sand” for investors, first-home buyers continued to lead the market, accounting for a record high of nearly 28% of property purchases in September, CoreLogic has reported.
CoreLogic NZ’s Monthly Housing Chart Pack showed residential sales numbers, including transactions through estate agents and private deals, have seen five consecutive months of growth, with September’s figure up 8% on a year ago.
First-home buyers dominated the property market across most major centres, with Auckland and Christchurch markets each constituting 29% of property purchases.
Kelvin Davidson (pictured above), CoreLogic NZ chief property economist, said strong first-home buyer presence was due to lower house prices, less competition from other buyer groups, and support from financing incentives such as LVR low-deposit allowances. But that may take a slight turn following government changes.
Relocating owner-occupiers, or movers, and MPOs have been notably less active than usual, accounting for 26% and 21%, respectively, of purchases during the third quarter.
“We may see activity reemerge from movers and mortgaged MPOs as ‘property-friendly’ policies are slowly introduced after a change in government, but we’re not convinced it will radically transform the subdued recovery that has commenced,” Davidson said.
“Investors will be feeling more encouraged, but don’t seem likely to flood the market because even though tax bills might get smaller, they are still restrained by 35% required deposits, along with low rental yields and high mortgage rates. Therefore, they’ll still be required to ‘top up’ the cashflow on their property purchases out of other jobs or sources of income.”
The average property values hit the bottom at a national level last month, after some 18 months of declines. Davidson pointed to the listings situation as a contributing factor that led to the end of value declines.
Over the four weeks ending Oct. 8, the new listings count was 7,316, down by around 15% compared to the same time last year and the five-year average. However, they are still rising for spring.
“We’re still seeing low flows of new listings each week which combined with rising sales volumes, are seeing stock of listings on the market drop,” Davidson said.
“This means buyers who have secured their finances may start to see more competition. The increased confidence to buy when prices stop falling could bring out a bit of demand too, as no one wants to buy a house and find out they could have got it cheaper later.”
“Other key supports include the strong labour market and high net migration, but ‘higher for longer’ mortgage rates remain a significant challenge.”
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