This as the buyer group's market share slumps to historic low
Mortgaged multiple property owners (MPOs) saw their share of property purchases sink to a new record low of 19.9% in April, with low yields, high mortgage rates, high deposits, and interest deductibility changes major deterrents to the buyer group.
CoreLogic NZ’s Buyer Classification data released as part of May’s Monthly Housing Chart Pack revealed a slump in mortgaged MPOs market share, while first home buyers (25.3%) and cash MPOs (25.3%) were running at record highs.
Kelvin Davidson (pictured above), CoreLogic NZ chief property economist, said the record low is slightly below the previous mark of 20% from September last year.
“Mortgaged MPOs still have a higher market share than cash MPOs, but when measured against their own past they are now relatively weak while cash MPOs and FHBs are taking a larger-than-usual share,” Davidson said.
“The current market conditions are particularly tough for mortgaged MPOs, most notably low rental yields, high mortgage rates, and the removal of interest deductibility as a tax write off.
“The 40% deposit requirement has also been a hurdle, however, the prospect of that loosening to 35% from June 1 should provide some slight relief, but not significantly. 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 growing an existing portfolio.”
Sales and new listings low
Sales volumes remained low in April, while the flow of new listings coming onto the market each week has remained sluggish, with Davidson saying it continued to be a buyer’s market.
But while the total stock of listings available on the market nationally was at a multi-year high, there were some signs that total stock levels have just started to decline a little, with Auckland an example.
“The total stock of listings available on the market are continuing to drop, as sales activity, although still low, is tending to outweigh new listings flows – which are really weak,” 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. Whether you regard this as good or bad, of course, depends on your perspective, but it’s also worth noting that an immediate or strong upturn in this environment doesn’t seem likely either.”
Below are the highlights of the May Housing Chart Pack:
- Residential real estate is worth $1.57 trillion
- House sales in the 12 months to April 2023 fell -30.5% on last year
- Over the four weeks ending May 7, there were 6,778 new listings, down -23% on the same period last year
- Total listings on the market were starting to fall, but remained 15% higher than the five-year average
- Property values dipped -2.6% in the past three months, and -10.3% over the year
- The upper quartile of the market was leading the downturn, with values falling -13.1% from the peak, while the lower quartile has dropped by -8.5%
- Wellington was the weakest of the main centres, with values down 20.8% from the peak, while Christchurch was only 6.2% down
- Rental growth sat at 3-4% nationally over the past 12 months, although it’s a mixed bag around the main centres
- Tauranga had the largest annual change in rent among the main centres, at 9%, making it the most expensive main centre to rent ($614)
- Gross rental yields nationally have hit 3% for the first time since March 2021, mainly due to the continued falls in property values
Click here to access CoreLogic’s May Housing Chart Pack.
Use the comment section below to tell us how you felt about this.
