CoreLogic’s latest data shows this is due to the 40% deposit requirement for investors rather than the March tax changes.

The June Buyer Classification data series figures show the decline for mortgaged investors’ (multiple property owner) market share is now well and truly underway as had been anticipated.

Their share of purchases in June was 24.2% – the lowest since June last year – leaving the figure for the second quarter of this year at 25.0%.

CoreLogic chief economist Kelvin Davidson says the number of purchases made by mortgaged investors in the second quarter was still pretty strong, in fact the highest for a June quarter since 2016.

“At least from the Government’s perspective of ‘tilting the market’ away from investors, these shifts in the market share figures will be what it is wanting to see.”

He says it’s debatable whether the Government’s proposed tax changes, scrapping mortgage interest deductibility and extending the bright-line test, can take much of the credit for the decline in mortgaged investors’ market share just yet.

“The tightening of deposit levels is likely to have been the dominant factor,” says Davidson.

“The evolution of mortgaged investors' market share this time around has been pretty similar to what it was when investors last required 40% equity at the end of 2016.

“If anything, however, the figure may dip lower in this cycle, given the extra focus from the Government in terms of the extension of the bright-line test and phased removal of interest deductibility.”

He says it’s interesting that the falls in mortgaged investors’ market share in the past three months have come at the smaller end of the spectrum, those buyers who have two properties after their latest purchase – ie generally their own home and one rental – or those with three to four.

“These smaller investors are potentially affected most by the tighter financing requirements and also perhaps take the more cautious path as they wait to assess what the final rules might actually be. The consultation on these ended last month.”

Turning to other groups in the market, Davidson says the offsetting rise in share of purchases has been for first home buyers. After a peak of 25% in the third quarter last year, their market share dropped to 21% over the next two quarters – but has now risen back to 24% in the second quarter of this year, and 25.1% in June alone – back above the mortgaged investors’ figure.

Although the years to save for a first home measure has recently risen to a new high of 9.5 years, first home buyers are still finding ways to access the market – including KiwiSaver withdrawals for their deposit, and also taking advantage of the LVR speed limits.

“Four-fifths of all lending done at less than a 20% deposit in May was to FHBs,” he says.

CoreLogic’s outlook is for mortgaged investors’ figures to keep declining.

It also expects price growth to slow, but more due to general affordability pressures and mortgage rate rises, rather than a dropping investor presence.