Investors dominate busy low end sales

Auckland is marching to its own beat when it comes to the property market.

Auckland is clearly marching to its own beat.For the past three years we have been talking about Auckland property values rising much faster than the rest of the country.

Rising values are not the only way that the Auckland market differs. Another significant difference is the sales activity at the low end of the market. To measure that we split the entire housing stock into three groups based on value; the top 30 per cent of properties, the middle 40 per cent and the lowest 30 per cent.

We then track what share of sales fall into each of those value groups.

In Auckland during the first quarter of this year 35 per cent of all sales were in the lowest 30 per cent of the housing stock. This activity at the low end of the market has been recovering from all-time lows following the 2008 Global Financial Crisis. At 35 per cent of all sales it is now nearly at an all-time high.

Compare that to the rest of the country where sales of the lowest 30 per cent of properties are only 25.7 per cent of the total, only a slight increase from 24.5 per cent in 2010, and still only just above an all-time low.

Digging further into this activity at the low end of the market, our buyer classification analysis tells us what types of buyers are active.

Investors are by far the most active in the low end in Auckland. They account for 42 per cent of all sales, much higher than the 26 per cent by first-home buyers and 17 per cent of people moving house.

Furthermore, this investor activity in Auckland has grown strongly since 2010.

In contrast, first-home buyer activity is considerably lower than in 2010, most likely as a result of strongly rising values making it tougher for them to enter the market.

Across the rest of the country investors also account for most of the sales in the low end of the market, picking up 36 per cent of sales compared with 24 per cent for first-home buyers. However, both investor and first-home buyer activity are at similar levels to 2010.

Auckland is clearly marching to its own beat, and I have no expectation that the rest of the country will follow any time soon.