Photo: RNZ
A combination of lower interest rates and cheaper house prices is tempting property investors back into the market, but one data firm says that shouldn't concern first-home buyers too much.
Corelogic's buyer classification data shows that first-home buyers were responsible for 25 percent of all property purchases in the first quarter of the year, a small drop from the end of last year.
But investors increased their share of the activity to 23 percent. They had been as low as 20 percent earlier last year.
Corelogic chief property economist Kelvin Davidson said falls in mortgage rates had helped investors.
Reduced loan-to-value restrictions could also help, as would the return of home loan interest deductibility, which means investors can once again claim their interest costs against their rental income.
But Davidson said the biggest change would be the size of the "top up" required for a new investment purchase.
He said when home loan rates were above 7 percent, investors could have faced the prospect of having to pay $400 a week to service a loan, on top of the rent they received. Now it might be more like $200.
He said the comeback had been "powered by mums and dads" with just one investment property. They were 8 percent of the activity, from 6 percent mid-2023.
Investors were shifting away from new builds a bit, too, from 30 percent of activity in the segment in 2023 to 27 percent.
"A relative reduction in demand from mortgaged investors for new properties would certainly be consistent with the changes in interest deductibility, meaning that older properties no longer carry higher tax bills than new builds," Davidson said.
Property investor Graeme Fowler said he got the sense that investment activity was picking up slowly as interest rates "made it make more sense" to buy.
But property investment coach Steve Goodey said they were not "flooding in".
"The OCR drops so far have turned the ungainly ship towards investment a bit more but I think it's more to do with not being able to make money from term deposits, people are turning towards property assets again."
He said the number of properties for sale and rent suggested there was still "pain and suffering" in the market.
"There are some opportunistic buyers out there."
Davidson said even if property investors took a larger share of the market this year, first-home buyers might still purchase more properties than they did in 2024.
"It's important to look at the number of deals and market share. First-home buyers have had a very high market share for a long time, it's been at a record high ... this year we may well see first-home buyers' market share come down.
"But in a busier market overall you could still see more first-home buyers."
He said he was expecting to see 10,000 more property deals this year than last.
Davidson said investors were still a little bit below their normal market share, which was usually about 25 percent.
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