Tony Alexander: Will voters’ shift to the right bring back investors?

ANALYSIS: For over two months I have been noting the return to the residential real estate market of first home buyers. We can easily see this in my monthly surveys of mortgage advisors and real estate agents. For instance, in my monthly survey of mortgage brokers a net 47% most recently have said that they are seeing more first time buyers in the market. A net 27% of real estate agents also say that they are seeing more first home buyers.

But are we seeing more investors in the market? Each of my five monthly surveys gives some insight into what investors are doing and collectively while they show investors are becoming a little bit more interested in the market none of them are truly showing that the investors are coming back.

A net 5% of mortgage advisors a few weeks ago said that they are seeing fewer investors coming forward looking for advice. This was, however, better than the net 33% four weeks earlier and was the least negative outcome since the start of 2021.

A net 28% of real estate agents still say that they are seeing fewer investors. This is an improvement from 34% at the end of August and the least negative result since February 2021. But it is still firmly negative.

My monthly survey of consumers in general has shown reasonably consistently since March this year a net 10% of people planning to cut back on their purchases of investment property. There is no improving trend underway.

But my two other monthly surveys, which focus specifically on investors, do show some greater degrees of interest. The monthly survey of portfolio investors which I run with Sharesies most recently showed a net 17% of respondents planning to increase their purchases of residential property. This was up from 15% a month earlier and the strongest result since the survey started in October last year.

And finally, the monthly survey of existing residential property investors which I run with Crockers Property Management last month showed a net 10% planning to increase their property purchases. In the previous month a net 1% were still planning to cut back on their property holdings.

The surveys do not in my opinion add up to a case for saying that investors are coming back into the market so that their new buying exceeds their new selling. But it does look like they may be paying interest in the reports of first home buyers at least starting to take advantage of the doubling in listings from a year ago and the strong fall in prices from the peak of late 2021.

Tony Alexander: “National Party have said that they will reverse all the tax increases which have been imposed and are set to be imposed by Labour.” Photo / Fiona Goodall

One interesting thing to keep an eye on will be whether the shift away from left-leaning candidates in local body elections will be considered as a strong indication of what is likely to happen in the general election late next year. If people believe a shift away from the left in New Zealand truly is underway, then this may encourage some investors to do what the first home buyers are doing and take advantage of vendors increasingly willing to meet the market.

This is because the National Party have said that they will reverse all the tax increases which have been imposed and are set to be imposed by Labour (and the list of them seems to keep growing). The most important one here is Labour's removal of the ability of residential property investors to deduct interest expenses when calculating their taxable income.

- Tony Alexander is an independent economics commentator. Additional commentary from him can be found at www.tonyalexander.nz