1. First home buyers probably had another tough month in March
Late this week, CoreLogic’s Buyer Classification figures for March will be available, and I’d broadly anticipate a continuation of February’s patterns: movers (owner-occupiers moving up or down the ladder) having a greater presence in the market, mortgaged investors ticking over at a low-ish level, and first home buyers potentially seeing their percentage share of property purchases edge down again. That said, with more listings available, those first home buyers who did manage to successfully purchase last month could well have snapped up a good deal.
2. But are credit conditions easing just a little?
There are tentative signs that the worst may have passed for credit availability – even if it doesn’t improve much, and of course will still cost more as mortgage rates rise. Encouragingly, I’ve heard snippets here and there that “informal” debt to income ratio caps at some of the banks are being relaxed a little, the rock-bottom levels of low deposit finance may also have improved a bit, and of course the spirit of the CCCFA loosening may be starting to pass through too. That would be great for first home buyers (and other borrowers), but it’s still going to be a much tougher year in 2022 than it was in 2021.
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3. Filled jobs dropped in February
Last week’s figures from Stats NZ showing a drop in filled jobs in February didn’t get much attention, but are very important to keep an eye on. The fall of 0.3% was the first since January last year, and in number terms (-5,988 seasonally adjusted) was the biggest since November 2020. Now, you can’t call one fall a new trend. For example, it may prove to just be a blip caused by more people leaving their jobs but employers not being able to refill those roles quickly – perhaps due to skill shortages. Even so, the labour market could potentially be the difference between a soft and hard landing for the property market this year, so I’ll be watching March’s filled jobs figures closely (released April 28).
CoreLogic chief economist Kelvin Davison: “There’s a good chance that consents will start to drop soon.” Photo / Peter Meecham
4. Dwelling consents continue to defy gravity
Another month, another new record for dwelling consents. After a softer month in January, dwelling consents roared back in February, and the annual running total lifted to 49,773. Smaller dwellings such as townhouses and apartments accounted for 48.7% of that total, again a record high. In Auckland, smaller dwellings accounted for an even greater 68.4% of the total – a clear shift towards a more intensified housing stock, at least in part due to the Unitary Plan. However, with costs rising rapidly (deterring some households from the new-build path) and builders themselves pretty much unable to work any faster, there’s still a good chance that consents will start to drop soon.
5. Economic confidence is still in the doldrums
Even despite the news of further relaxation of the Covid restrictions, both businesses and consumers remain in a downbeat mood. The latest ANZ survey did show a small improvement in business confidence in March, but from a low base. And the consumer measure simply fell to a new record low. Meanwhile, the inflation questions painted a picture of further intense price pressures in the months to come, which will lock in continued official cash rate increases, and upwards pressure on mortgage rates.
- Kelvin Davidson is chief economist at property insights firm CoreLogic
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