Key Issues: Buyer Classification And COVID-19 Effects

CoreLogic Senior Property Economist Kelvin Davidson writes:

Based on the CoreLogic Buyer Classification data, investors retained a strong appetite for residential property in February. Indeed, cash multiple property owners (MPOs, or investors) accounted for 14.5% of purchases for the month and their mortgaged counterparts took a 26.2% share. That’s the first time the combined market share has cracked 40% for almost four years. Low-term deposit rates are one factor that have pushed investors back towards property, while anecdotally, we’ve lately heard that the control an investor has over a rental property (as opposed to say shares or a syndicated fund) is another strong drawcard.

At the same time, there were hints in the latest Buyer Classification data that first home buyers (FHBs) have begun to feel a bit more strain. As the first chart shows, their market share of 23% for the first two months of the year represents a dip (admittedly small) from recent norms. It’s nothing serious yet, but the competition from reinvigorated investors, as well as renewed growth in house prices, may have started to hamper FHBs. Auckland is a good example of these patterns, where mo

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