It goes without saying that recent months have been a hugely distorted period for the property market. But deals have still been done, and CoreLogic’s Buyer Classification figures show that investors have remained key players in terms of market share (albeit a lower number of deals), with first home buyers dipping a little. Meanwhile, owner-occupiers who are relocating have shown tentative signs of a pick-up.

Property sales activity has clearly been thrown around by COVID-19 and the various alert levels, with volumes in April and May lower than they otherwise would have been, not to mention the settlement of some transactions being delayed during full level 4 lockdown. But across recent months there’s still been deals done, and that raises the question, who’s been involved?

The CoreLogic Buyer Classification figures for May have just been released and when combined with April’s results they show that so far in Q2 cash investors (multiple property owners/MPOs) have had a relatively steady market share, with mortgaged investors also holding their ground at about 25% of purchases. In other words, investors have retained their presence in the market in recent months (albeit that the number of deals has been lower).

NZ % share of property purchases (Source: CoreLogic)
NZ % share of property purchases (Source: CoreLogic)

Another interesting point has been the recent small rise in market share for movers (owner-occupiers who are relocating) alongside the drop for first home buyers (FHBs). To be fair, it’s early days yet and the thin volumes mean that conclusions need to be made with care, but it’s still worth noting that FHBs’ market share of 23% (while still solid) is their lowest in about two years – see the first chart. FHBs’ market share had actually already started to edge lower prior to lockdown, so there may be some signs here of emerging affordability pressures for would-be buyers.

Wellington % share of purchases (Source: CoreLogic)
Wellington % share of purchases (Source: CoreLogic)

At a more granular level, most of the main centres have mirrored the NZ picture, although wider Wellington (City, Porirua, Lower & Upper Hutt) continues to see a high market share for FHBs (see the second chart). In Dunedin, FHBs could well be starting to struggle with the previous rapid gains in prices, while mortgaged investors have seen their market share grow strongly over the past few months (see the third chart).

Dunedin % share of purchases (Source: CoreLogic)
Dunedin % share of purchases (Source: CoreLogic)

To finish off with the actual data, the fourth chart combines cash and mortgaged purchases by investors, then splits them by the number of properties owned (after the latest purchase). As it shows, the smaller players – i.e. MPO 2 or MPO 3-4 (those with two, three or four properties) – have kept a solid presence in the market in recent months. One factor behind the interest in property from these ‘Mum and Dad’ investors is likely to have been the low returns on other assets, such as term deposits. 

NZ % share of purchases by investors by number of properties owned (Source: CoreLogic)
NZ % share of purchases by investors by number of properties owned (Source: CoreLogic)

Looking ahead, investors’ presence could hold up in the coming months, not least because some will be searching for ‘bargains’ in a subdued market. There are obviously many drivers behind FHB activity, but one factor in their favour has at least been the recovery in KiwiSaver balances, hence potential house deposits. And for movers, some will no doubt be keen to upsize after finding during lockdown that they need more space, but unfortunately it may not always be an option (e.g. due to already high debt levels and the costs involved to relocate).