The latest CoreLogic Buyer Classification data shows that investors, both mortgaged and non-mortgaged, were providing a lot of the momentum in property transaction activity pre-lockdown. First home buyers were also hanging on relatively well. However, these are now just the baseline figures against which we’ll measure the market post-lockdown, and how the buyer mix is changing. Finally, mortgagee sales have recently been very low, but will be another key indicator to watch post-lockdown.

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

The CoreLogic Buyer Classification data for March/Q1 is now available and it provides some really interesting insights into which groups were active in the property market prior to the lockdown starting to bite* – and hence also sets the baseline against which we’ll measure post-lockdown data.

The first point to note is that multiple property owners – i.e. investors – remained the key ‘movers and shakers’ prior to lockdown. For the first quarter of the year, mortgaged investors had a 25% share of property purchases across the country, up from 23% the same time last year. Similarly, cash investors were also on the comeback, hitting a 13% market share for Q1 (see the first chart). As outlined in last week’s Pulse, factors for investors coming back to property include low returns on other assets, the perception that property is ‘safe’ in these current uncertain times, and the ability that landlords have to run their investment as they choose.

Investor % of purchases by number of properties owned after latest purchase (Source: CoreLogic)
Investor % of purchases by number of properties owned after latest purchase (Source: CoreLogic)

Digging a little deeper into these purchases by investors, the second chart shows that it was still the smaller players who were providing the momentum pre-lockdown. Investors with two properties (i.e. MPO 2) after their latest purchase – which would typically mean owning their own home and one rental property – had grown their market share (regardless of mortgaged or cash) to 11% in Q1. Those with 3-4 properties after their latest purchase had also raised their market share, hitting 10% of activity in Q1 (see the second chart).

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

Meanwhile, across NZ as a whole, movers (i.e. existing owner-occupiers who are relocating) remained relatively quiet pre-lockdown and the share of purchases by first home buyers (FHBs) also ticked down a touch in Q1 – but at 23%, was still a decent figure by past standards. In addition, more specific parts of the country continued to be driven by FHBs pre-lockdown – e.g. the wider Wellington market (City, Porirua, Hutt Valley), where their share was 31% in Q1, as shown in the third chart.

Looking ahead, it will be fascinating to see how these figures evolve over the coming months. It’s possible that existing owner occupiers (movers) will remain quiet and stay where they are, as they wait out any market uncertainty. The ability of FHBs to enter the market is likely to have been impacted by reductions in KiwiSaver balances, so their market share could potentially ease down further in the coming months. Mortgaged investors may also find it harder to make the buying sums add up post-lockdown (e.g. if rents start to weaken), but cash investors could well be on the hunt for some bargains. In the end, nothing is certain, and we’ll just have to watch closely for how the incoming data plays out – note that April’s Buyer Classification figures will be available from 11th May, but will of course be based on thin transaction volumes.

Number of mortgagee sales (Source: CoreLogic)
Number of mortgagee sales (Source: CoreLogic)

As a final note on a pre-lockdown baseline for data, the fourth chart shows that we’ve recently had very low levels of mortgagee sales across NZ. But with unemployment starting to rise sharply, the chances are that these figures will unfortunately start to increase from now on. However, the hope has to be that the mortgage payment deferral scheme (for example) and the supportive attitudes that lenders are showing will help keep mortgagee sales as low as possible.

* To be fair, the Q1 data of course included the last 4-5 days of March, so the figures are not all pre-lockdown.