“There remain multiple supports for first home buyer activity. Obviously, lower house prices and reduced mortgage rates help, as does access to KiwiSaver for at least part of their deposit.
“But not even needing to save a 20% deposit in the first place is proving beneficial too – as part of the loan-to-value ratio (LVR) rules, the latest Reserve Bank figures show that more than half of first home buyer loans over January and February were done at less than 20% equity."
“Mum and dad” investors – or mortgaged multiple property owners (MPO) – are also back, increasing their share to 24%.
The data shows that smaller players were driving the overall rise in mortgaged MPOs – those that now own two properties after their latest purchase.
“For the MPO buyer group, key supports also include lower house prices and mortgage rates, as well as the shift back to 100% deductibility for interest costs,” Davidson said.
“Our calculations suggest a ‘typical’ new investor may have had to find an extra $400-$450 per week when house prices were higher and mortgage rates were 7% or more … but now that’s perhaps $150-$200 instead.”
Meanwhile, relocating owner-occupiers, or “movers”, were quieter in the first three months of the year than normal, accounting for 26% of activity, below their average of around 28%.
“History shows that they take their lead from wider consumer confidence levels, economic growth, and job security, with the patchiness of these factors helping to explain movers’ low presence lately,” Davidson said.
Davidson said the Iran conflict had put an extra layer of uncertainty over any potential economic recovery, as well as the housing market outlook.
“The hope is that the ceasefire becomes permanent and we can get back to ‘normality’. But there’s always the risk it doesn’t prove lasting and, even if it does, there’ll still be some economic dislocation in the near term as a rebuild process gets underway.”
