Recent changes affecting property buyers across the board

Date: 12 January 2017

Nick Goodall, Senior Research Analyst, CoreLogic NZ Ltd
 
The QV House Price Index stats are out for December and what most stood out for me was the drop in value month-on-month for 12 of the 72 cities/districts nationwide, perhaps most notably in Auckland as well as in Hamilton. 
 
Upon reflection however, this stat isn’t completely surprising for two reasons. Firstly, we’d already seen a cooling off in the previous months - Auckland’s annual change had dropped from 15.9% in August to 12.8% in November, and to the latest figure of 12.2% in December. Hamilton’s annual change had dropped from 31.5% in July to 23.1% in November, and now 20.4% in December. Secondly, we’ve seen the impact of previous LVR limits over the Christmas period before: after the original restrictions in late 2015 required a 30% deposit for investors in Auckland, values dropped 0.8% from December 2014 to February 2015. 
 
So this is nothing new, but after the small drop over 2015/2016, values in Auckland grew 9.2% over the subsequent six months to August 2016.  Are we likely to see a rebound in values this time? In all likelihood I’d say yes - we’ll see a similar, if slightly more subdued, trend emerge this year.  
 
While some potential buyers have been affected by the latest LVR limits, it doesn’t appear to have been enough to significantly reduce competition for the limited number of properties that are available.
 
Also, rising mortgage interest rates may reduce the total amount that people can borrow (and therefore pay), so this may have more of an effect on rising prices, hence the growth being more subdued. In the end though there’s still a demand/supply imbalance with new construction improving slowly, and net migration picked to stay in the large positives for the foreseeable future.
 
It’s also important to remember that at the same time as tightening the LVR limits for investors, the Reserve Bank also reduced the amount of high LVR loans that banks were able to offer to owner-occupiers.
 
This has led to a drop in activity across the board. Sales volumes in late 2016 across all six of the main centres are down on the same period for 2015 and there’s been no major change in the mix of buyers in the market according to our nationwide Buyer Classification series. Investors continue to pick up roughly 40% of sales and first home buyers 21%. Other owner-occupiers (those moving between homes) did dip away slightly at the end of the year – going from 27.7% of sales in Q3 to 26.2% in Q4 – perhaps holding back due to increased uncertainty in the market.
 
This share between investors/first-home buyers/home movers does vary by location. Auckland investors finally ventured to Dunedin, but not exactly en mass. They accounted for 5% and 4% of sales in Q3 and Q4 respectively – up from a recent average of 3%. Otherwise the Dunedin breakdown looks similar to the nationwide picture, with other investors picking up 36% of sales in Q4 and first home buyers accounting for 22% of sales. 
 
In Christchurch, first home buyers have found their way back into the market as value growth remains flat (-0.3% quarterly growth), picking up 23% of sales in Q4 2016, an increase from only 19% two and a half years ago. Investors still remain strong here however, buying 43% of properties sold in Q4.
 
In the Wellington region we get the first real point of difference as first home buyers go from strength to strength – to the point where 31% of sales in Q4 were to this group of buyers. Both investors (36%) and owner-occupiers moving house (20%) picked up a lesser share of sales between Q3 and Q4.
 
Investor presence in Tauranga remains very high, accounting for 46% of sales in Q4, with almost one in four of these investors based in Auckland. Owner-occupiers moving house also favour the Bay with roughly 30% of sales to these buyers and a third of these from Auckland. First home buyers are less prevalent here, accounting for only 16% of sales in Q4.
 
Hamilton has also been attractive to Auckland investors but their activity has reduced throughout the last 18 months – from 17% of sales in Q3 2015 to just 11% in Q4 2016. Other investors (36%) take total investor purchases to 47%, with first home buyers (22%) and owner-occupiers moving house (21%) having a similar share of the remainder of sales in Q4.
 
Back to the Super City, where investor purchases have plateaued at 43% as first home buyers (21%) still find a way into the market despite excessive prices. Owner-occupiers moving house have slightly reduced their activity in the market, accounting for 23% of sales in Q4 2016. 
 
One final point of note as we kick into the New Year is that the total value of all residential property in NZ hit quite the milestone last month – now totalling over 1 trillion dollars. You could argue it’s just a number, but it is a bloody big one! 
 
New Zealand Regional Maps:
 

Tags: Property, CoreLogic, Auckland, Wellington Housing, Real Estate, Property Market, House Prices, Property Values, Homes Values


Comments:

2 Comments

lorraine kiesanowski (New Zealand)
12:15 PM 29 January 2017
Hi we requested an updated photo of our address be placed in your website for the purpose of selling ( Sent: Friday, December 23, 2016 6:45 PM) . We even gave you an up dated photo. Sent: , January 14 , 2017.
response: 16th jan 2017 Thank you for your email. I have updated the photos on our website as requested in your email. Please allow 5-7 days to update on our website.
Sunday, 22 January 2017 10:28 PM email sent asking when the photo will be updated .
response:Sorry about the delay on the update, usually our data is updated every Tuesday morning but due to Wellington Anniversary the data team isn’t in the office today so there will be a delay on the update until Wednesday morning (24/01/2017).
Please check back on the property in question on Wednesday afternoon and it should hopefully be updated for you.
SO my query is
Today is 29th Jan 2017. why is it seemingly impossible to upload a correct photo of a property that you are offering a valuation on, when the photo "you have " loaded,does not even match any property in our street let alone our house. How implausible does that make your facts you offer on your website . And how believable is the info passed on by your Customer Service representatives.
Steve (New Zealand)
07:02 PM 12 January 2017
Page 23 core logic January report gives a hit at the new darlings for investors.. Along with central Otago, PN and Dunedin are the only regions showing big increases in number of valuations under taken aswel as the only nz cities where sales are up big time yoy.