Key Facts:


– The biggest retreat from the New Zealand housing market in recent years has been by smaller investors, often referred to as “Mum and Dad” investors.
– Rental growth is at a near-record level, with a national rate of 7.2% and an even stronger rate of 9.4% in Auckland.
– Mortgage lending data shows that loan flows in September were up slightly compared to the same month last year, but the increase was not as significant as in August.
– The Reserve Bank is expected to provide clarity on debt to income ratios (DTIs) in its upcoming Financial Stability Report.
– The Q3 labour market data, which will be released this week, may show a continued increase in the unemployment rate.

Article Summary:


The latest data from CoreLogic shows that smaller investors, often referred to as “Mum and Dad” investors, have been retreating from the New Zealand housing market. This could be due to a conscious choice to invest in safer options or because of tighter credit criteria from banks. However, with the potential reinstatement of mortgage interest deductibility, smaller investors may start to return to the market. Nevertheless, the low rental yields and high mortgage rates may limit their impact.

Rental growth is currently at a near-record level, with a national rate of 7.2% and an even stronger rate of 9.4% in Auckland. This growth is partially attributed to the recent migration boom, which has resulted in an increase in population levels. New migrants tend to rent, leading to higher demand in the rental market.

Mortgage lending flows have been patchy, with September’s data showing a slight increase compared to the same month last year but not as significant as the previous month. This highlights the uneven nature of the housing market recovery.

The Reserve Bank is expected to provide clarity on debt to income ratios (DTIs) in its upcoming Financial Stability Report. DTIs would mark a significant change for mortgages in New Zealand, but awareness among the general public remains uncertain.

This week, Stats NZ will release the benchmark Q3 labour market data. The unemployment rate has already started to rise, and if the trend continues, the Reserve Bank may feel more confident in its current monetary policies. However, the increase in unemployment is not due to job losses but rather a larger labour force, so there is no immediate concern about existing mortgage holders’ ability to adjust to higher mortgage rates.

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