25 September 2014

Property Investors dominate the market

Investors are replacing first home buyers as the driving force in the market in the wake of the LVR restrictions, with residential property investment around its highest level in the past decade.

According to data from CoreLogic, first home buyers are at the same level as during the global financial crisis, and Multiple Property Owners – those with more than two properties - have increased from 37% of market registrations in September 2013 to 42% in August 2014.

To meet market demands, Westpac has launched a team of Investment Property Lending Specialists, refreshed product offerings for investors and developed an online resource centre.

General Manager Retail Bank, Ian Blair, says investors have replaced first home buyers [as the dominant force] in the market since the introduction of the Reserve Bank’s LVR restrictions last October and it’s important they have access to information to assist their decision making.

“The trend is clear; investors are filling the void left by first home buyers who have tailed off since LVR’s were introduced. While the trend is most prominent in Auckland and Canterbury investors are making their presence felt across the country,” he said.

“Investors have become more dominant in the market, although there is support for first home buyers through the Welcome Home Loan scheme. While the rest of the market has dropped off, investors have remained steady with the number of those who have bought a second property increasing nearly 2% since September 2013. Serious investors with ten or more properties have increased 2.2%. We’ve introduced a team of specialist bankers to meet that demand.”

“Consumers now undertake more research online before making decisions so it makes sense to have a strong online resource centre for property investors so they can assess possible returns and how it affects their financial position. This can help save them time and assess whether they can afford the property and what the returns might look like.”

The online resource centre includes a new property investment calculator which shows rental yield and capital gains in year one, as well as a forecast over a chosen period, and net cash flow position. It also includes key information, lending options, tools and resources like case studies and property manager checklists.

Blair says Westpac has put a fresh focus on its investor product offering and it is the only bank to offer up to 30-years interest only loans.

“We recognise that customers with residential investment properties often need to keep repayments to a minimum, reducing outgoings and freeing up cash flow. This can be particularly useful for those investors looking to achieve capital growth in the short to medium term.”

Some interesting trends have occurred in the housing market over the last few months.

‘Movers’ a segment who might normally consider moving or trading up are staying put possibly waiting on the outcome of the elections or preferring to renovate instead. In Auckland, an additional reason maybe the new council valuations for all properties due out in November. Home owners are possibly sitting tight to that get the new valuation before considering selling.