The stars are aligning for property.
– a huge surge in immigration
– reducing number of new builds
– high and rising construction costs
– a possible top in interest rates
– brightline reduction to 2 years
– changes coming to CCCFA rules which will ease lending restrictions so more people can borrow.
See full article from Stuff.co.nz:
By Susan Edmunds
Changing property market conditions may clear the way for a return of “mum and dad” property investors, Corelogic says.
Its latest buyer classification data shows the proportion of purchases by “mortgaged multiple property owners” has been lower than normal lately. It was at 21% in the third quater of this year versus an average of 25%.
But Corelogic said it was people who were buying their first investment property or their second or third that had dropped back in activity the most – and potentially were most likely to jump back in as the environment changed.
“They’ve fallen the most so it’s that idea that whatever has happened in the past two or three years has affected them the most, it stands to reason that with the unwinding of that they stand to benefit the most too,” said chief property economist Kelvin Davidson.
People buying a first investment property were 9% of the market in early 2021 but now are about 6%. People buying their third or fourth property – or second or third investment – were down from 8% to 5%.
People who own more than 10 properties have remained largely steady at 3% to 4% of the market.
Davidson said it was hard to get the numbers to work on a new investment at the moment. National’s promise of a shorter bright-line test and the reintroduction of investors’ ability to deduct interest from their incomes would change some of the calculations. Rents were also rising at a record rate, he said.
”It’s going to take some time for this to translate into activity.”
Davidson said he still expected the Reserve Bank to introduce debt-to-income caps next year, which he said could affect mid-range investors the most. Some might try to buy ahead of the rules coming into place.
“Overall, a full-scale comeback by investors may not be on the cards in the near term. If anything, however, it’s the smaller players who could start to perk up the most. They may already have some cash in the bank, a bit of equity in their own house, and less to lose from a possible DTI system.”
Property investor and coach Graeme Fowler said even though interest rates were still high, there had been a noticeable increase in interest in residential property investment.
“National are looking to phase the interest deductibility back in over the next year or two and are more encouraging of investors, rather than vilifying and wanting to penalise them. There has been a huge influx of new people joining the Property Investor Chat Group on Facebook which also shows renewed interest.
“I feel there is a lot more positivity around property investing than there has been for quite some time, and it’s great to see that.”
Another property investment coach, Steve Goodey, said people were more settled and banks were open to “favourable deals”. “Good quality stock is selling well. My broker is very, very busy. Listings are still very low which isn’t too good because people like the choice of having many properties to buy. The only negative is vendors’ expectations are still high.”
Trade Me Property sales director Gavin Lloyd said he expected to see more confidence in the market as investors returned.
“National’s housing policies may encourage investors to put properties up for rent which would help some of the current supply challenges we currently face. We’ve seen a small uptick in supply (5.4%) and listing views (2%) across Aotearoa for properties for sale but this is a trend we see often in spring and will continue into the warmer months.”
He said there had been an increase in interest from foreign buyers. National has indicated it would allow people offshore to buy houses worth more than $2 million, with a tax. Interest from Australia had lifted 4% and 10% from the United States. “We anticipate this may take a while to materialise into purchases.”
