The number of New Zealand property sales in September were 8 per cent higher than a year ago, with first-home buyers dominating the market.
According to CoreLogic’s NZ Monthly Housing Chart Pack, first-home buyers led the market, accounting for almost 28 per cent of property purchases last month – a record high.
That segment of the market dominated across most main centres, with Auckland and Christchurch markets making up 29 per cent of property purchases apiece.
In addition to that, the charts highlight that residential real estate is worth $1.58 trillion in New Zealand, and the number of property sales in September rose 8 per cent higher than a year ago, which was the fifth consecutive monthly increase.
CoreLogic NZ Chief Property Economist Kelvin Davidson said strong first-home buyer presence is a combined result of lower house prices, less competition from other buyer groups, and support from financing incentives such as LVR low-deposit allowances.
However, that may take a slight turn following the recent change in government.
Relocating owner-occupiers and mortgaged MPOs have been relatively quiet compared to normal, with respectively 26 per cent and 21 per cent of purchases over the third quarter of 2023.
“We may see activity remerge from movers and mortgaged MPOs as ‘property friendly’ policies are slowly introduced after a change in government but we’re not convinced it will radically transform the subdued recovery that has commenced,” Mr Davidson said.
“Investors will be feeling more encouraged, but don’t seem likely to flood the market because even though tax bills might get smaller, they are still restrained by 35 per cent required deposits, along with low rental yields and high mortgage rates.
“Therefore, they’ll still be required to ‘top up’ the cashflow on their property purchases out of other jobs or sources of income.”
There were 7316 new listings in the four weeks to October 8, which is down from 8597 in the same period last year.
Total stock on the market is also 15 per cent down on the same time 12 months ago, with 31,242 total listings for sale.
We’re still seeing low flows of new listings each week which combined with rising sales volumes, are seeing stock of listings on the market drop,” Mr Davidson said.
“This means buyers who have secured their finances may start to see more competition.
“The increased confidence to buy when prices stop falling could bring out a bit of demand too, as no one wants to buy a house and find out they could have got it cheaper later.
“Other key supports include the strong labour market and high net migration, but ‘higher for longer’ mortgage rates remain a significant challenge.”
The data also showed national rent growth hit more than 7 per cent in September, reflecting higher wages and a tightening of supply as migration increases across the country.
Gross rental yields nationally have edged back up to 3.2 per cent, from a trough of 2.6 per cent for much of 2022.
Inflation seems to have passed its peak and the Reserve Bank will wait to see the effects of the 5.5 per cent cash rate for this tightening cycle.
Mortgage rates are close to, or already at, their peak.