Speaking at TMM’s Better Business Conference last week, Nick Goodall said CoreLogic’s latest buyer classification data shows that the buyer group which has fallen the most is investors, who need mortgages.
Investors who are buying with cash not been affected by the Reserve Bank’s LVR restrictions and are ticking along the same as they always have been, he said.
“However, their share of transactions has gone up as other buyer groups have dropped away – and every type of buyer that requires a mortgage, including movers, has dropped away.
“First home buyers are actually doing okay with their share of sales transactions almost at pre-2013 LVR levels. They will continue to want to buy and they will make sacrifices to do so.”
Along with a significant drop in sales volumes overall, this has contributed to a slowdown in property values around the country.
Goodall said this has been most noticeable in Auckland although value growth is inconsistent across the region.
While there has been a big drop in value growth in parts of South Auckland and the North Shore, the central parts of the city continue to see some growth.
“But Auckland is its own market and the rest of the country is quite different, so it is necessary to look at them differently,” he said.
“There was a slight drop in value growth in Hamilton and Tauranga, but now they have started to pick up a bit again. Wellington and Dunedin initially resisted the slowdown, but have now started to flatten.
“Christchurch is different again. Its value growth was out of cycle due to the earthquakes and the rebuild, but now it is dropping off.”
Additionally, in those areas where demand is improving there is a lack of inventory.
Goodall said in such areas, which include Wellington and Dunedin, there is not much choice in stock so buyers have to compete and that means price growth is likely to come back in those areas.
But key to what happens next in the property market is what happens with supply and, while there are strong aspirations to increase supply, building industry constraints mean it may not be possible.
“If supply is not going to be able to catch up with demand those price pressures are still likely to be tight and prices should lift again, albeit more modestly and inconsistently across the country,” he said.
“It is getting close to Christmas/New Year though, so listings may not pick up until next year.”
