The NZ Property Market Podcast
Brought to you by cotality, formerly CoreLogic. Each week co-hosts Nick Goodall and Kelvin Davidson will bring you all the latest news, stats and insight to keep you up to date with everything to do with the NZ residential property market. Including sales volumes, house price indices, buyer activity, interest rates, loan-to-value ratio restrictions and all of the macro economic factors that influence our largest asset class. Contact us on twitter @NickGoodall_CL or @KDavidson_CL
The NZ Property Market Podcast
Looking into the rental market
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This week we kick off by unravelling the latest data from CoreLogic's May 2021 chart pack. From the significance of the first annual increase in sales volumes to the importance of understanding the bigger picture behind the numbers, this episode is packed with valuable insights!
We also delve into the drivers of the New Zealand property market and examine the recent increase in sales volumes, all while acknowledging that this growth is still low compared to long-term averages. Kelvin helps us comprehend the context beyond just the numbers, including the strength of the economy, current listing levels, and demand for property. We also discuss why we shouldn't necessarily expect a strong upturn anytime soon and how the market's growth is expected to be low and slow.
Lastly, we shed light on the rental market in New Zealand, with a particular focus on the Otago region and Queenstown, where the flow of rental listings is running 15% below normal. Kelvin walks us through the supply and demand dynamics due to high net migration and the potential rent increases we could see as a result. Learn about the importance of keeping good tenants (and a good landlord!).
Sign up for news and insights or contact on LinkedIn, Twitter @NickGoodall_CL or @KDavidson_CL and email nick.goodall@cotality.co.nz or kelvin.davidson@cotality.co.nz
Welcome to the New Zealand Property Market Podcast brought to you by CoreLogic, produced by Agence TV for the 26th of June 2023. I'm here to research in a good old and I'm joined by Chief Economist Kelvin Davidson. Kelvin, how are you, mate, how's your weekend?
Speaker 2:Yeah, pretty good. Pretty good. Not much to report, standard stuff, family bits and pieces to do with that. Watched a bit of sport. watched the rugby on Saturday night. maybe slightly controversial type of outcome, or at least the result probably wasn't controversial but maybe people debating the style of play and the position that rugby is in as a spectacle, i guess. So, yep, that's created a bit of discussion, but no, all good And yeah, heading into another busy week, so now feeling good Youself.
Speaker 1:Yeah, nice mate. Yeah, yeah, pretty similar for me really. I was in Auckland last week so it was good just to be back on the ground and spending time with the family and my sport could sport, decent weather, so, yeah, managed to get out and about and keep everyone happy enough. Yeah, on the rugby, yeah, look, i think there's probably naturally a bit of bitterness to see a team so dominant such as the Crusaders and, yeah, did feel like the Chiefs were kind of a more proactive team, let's say and I know this is going to come across really bitter but I've got a genuine question as to why it's been called seven competitions in a row that the Crusaders have won.
Speaker 1:When there was the Super Rugby Trans Tasman competition in 2021, which they didn't win they won one that year, which was the IT at all one, but not the Trans Tasman. So I'm not sure how it's seven in a row, what seven years they've won are comp in a row, but that's genuinely confusing because I've seen no coverage of it. It just seems to be an acceptance that maybe that competition never existed, maybe it was just crap that no one thought it was worthy of being counted, but they did enter a competition in the last couple of years that they did not win. So you know. But maybe I'm just too bitter and sour as a non-Kentabrian and wanting other teams to win. I don't know, but that's baffled me anyway.
Speaker 2:Yeah, not sure about that one. I'd have to go through the archive books. But yeah, i mean, you know I'm a Kentabrian. I suppose from that perspective it was the right result. But I just I'm not sure rugby is quite in the perfect position in terms of you know, that balance of entertainment. It felt like the Chiefs played more entertaining rugby and had a fantastic try scrapped out on a technicality and the Crusaders scored a couple of you know drives over from a lineout. So I just don't know about that. I'm in two minds about the whole thing. But however, it's done there. And yeah, bring on the, bring on the.
Speaker 1:A-Bs Got to play finals football right, and you grind out any win you can to win that championship and I suppose you've got to respect that. We know that if the All Blacks do it in the World Cup final and you know, and I think the Crusaders still scored more tries, of course, than the Chiefs but you have the All Blacks won the World Cup without scoring any tries and the opposition scored a couple and the All Blacks did a dirty or, you know, did it very grafting wise. I think we'd all be happy enough. So you've probably got two standards there. But all right, mate, let's move on. I'm sure there will be plenty of rugby, chattas, the All Blacks kick in over the next few weeks and things. So let's get into property.
Speaker 1:There were fewer data releases last week, so we'll sort of touch on a couple of things that we've been doing and paying attention to, but otherwise we'll sort of be able to look ahead this week. There's a few more data releases this week and what's coming up, so maybe we can shape the expectations around that too. But the first thing I would touch on was of course we did mention it last week the monthly chart pack which you put together, sort of covering everything in the market and I put a link in the last week's show notes too once the link was live so we can download that report. The key thing was I mean, there's obviously a pretty decent executive summary looking across all the different fundamentals across the market. But I know that one of the things that you know sort of took the headlines and that exact summary was the fact that we saw that first annual increase in sales volumes for a wee while.
Speaker 1:But I'm still sort of keen to point out my conversations with people that are still well down that long-term average too. So, as with everything, context is important here. But I know that took a lot of the coverage out there and you did plenty of media last week. You know radio TV online as well. Were there any surprises and some of the questions that you got, or the coverage or the angles people picked up on any sort of random summary? you wanted to take us through with the chart pack last week, kelvin.
Speaker 2:I wouldn't say there's too many surprise questions. I guess hopefully anybody who saw me in the media and saw her quotes and everything got the same perspective that you just talked about, which was sales went up when you look at this May compared to last May, but they're still pretty low And hopefully that tone came across. So that's starting from a low level. We're still at a low level, but turning points have to start somewhere, i guess. And when you look at the actual data showing an increase, we know that some of those fundamental seem to be shifting around. Maybe the mood's shifting a little bit. So, yeah, turning points have to start somewhere And I guess the drivers seem to be consistent with what we're seeing in the data. So you have to acknowledge that. But hopefully that did come across also that that's still low. We're not suddenly back to normal And I think one of the articles talked about how did you, as an average, we've seen historically, depending on where you define the long term average to be is it 40 years or 20 years or whatever a normal level for sales might be more like 90, 95,000 on an annual basis. We're currently running at less than 60,000. So still really low And so I think that perspective is important. Hopefully that came across.
Speaker 2:Yeah, but not too much in the way of surprise questions. It's funny how only what people pick up on and there's a that chart packs got 30 odd charts and a bit of commentary and everything And you just put in that one number 7.5% up for sales and people jump on it. So good for our coverage, i guess. But there was lots of other interesting things in the chart pack that didn't get picked up on And I guess we've still seen first, home buyers retaining a pretty good market share, investors still pretty quiet, property values got to acknowledge that still falling on our index. There might be those lags between the real world and an index, that sort of thing, but you still have to acknowledge that wider context that the market's still pretty quiet and values have continued to fall. So yeah, that was the general tone. Hopefully that came across. And, yeah, just watching all those indicators to see where they go.
Speaker 1:Yeah, exactly, that's a good summary And I suppose it's easier to talk about that context when you say do you have a chart there? And you can actually see the chart of sales volumes how far it has come down. But yes, it's turning, so that's obviously great. I thought it was also important to talk about the technical side around the data too, that our data does measure real estate agent sales and non real estate agent sales too, because the real estate agent sales were generally quite flat year on year for that month of May as well. So, just explaining why our data is a little bit different to the real estate institutes data out there. So that was another important one.
Speaker 1:And, as you say, that context around who's active in the market as well, that's always a key feature of what we talk about. But the other thing that seems to be, i'd say, dictating or sort of dominating conversations I'm having when talking to you know, presentations to clients and things, is also the fact that you know we're not just measuring the end of the downturn by looking at the index itself. It's the key fundamentals that we know will shape the market going forward. And so it is saying look, the strength of our economy, the fact that we know listings are low and it's putting all these things together to go. It feels like the drivers of the market, as you mentioned, are there for a turning of the market, which is why we talk about this context of. You know, even though some of the measures might not show that the market's actually bottomed out yet or that we expect it to be within a month or two, it's because of all these other factors. You know, demand coming back with luceral, vrs, triple CFA changes. You know it's all these things put together that shape our thinking around why we think that downturn is, has moderated and is likely to come to an end soon, if it hasn't already got there.
Speaker 1:Because, as you say, the index on its own does have a lagged effect and even the sales volumes, of course, you know, a little bit volatile month to month and so we're cautious to say just because it's in a lift in the annual change in sales volumes doesn't mean we necessarily have the bottom just yet on that one measure either.
Speaker 1:It's all these fundamentals, these factors, these drivers that give us that broader feeling for it's there or there about the turning points here And that's why we tend to go as long as you can acknowledge that's roughly true, then we'll start talking about what we expect to happen on the other side of this market and not just focus so much on trying to pick this trough and more talk about what our expectations are for the rest of this year, you know being the year of two halves and things improving second half and then what it might look like into next year as well.
Speaker 1:And I suppose that's where your I think you know strong commentary over and over again, no matter what source people should be seeing and reading and hearing this is that we don't, you know, the end of the downturn doesn't mean the start of the upturn, and that we do expect this low, slow growth to come back, but not to, you know, go on a tear back at that six or seven per cent per annum. You know long term rate that we're seeing over a large, long history. We don't expect it to kick straight in either. And again that's probably the broader context that we keep trying to force in most of our conversations that just because things are bottoming out doesn't mean we're going to see strong growth take off. On the other end And again we've talked about it and I'm sure we will in the future. There's a number of factors that lead to those expectations from us as well. But yeah, it's a great monthly check-in on everything in the market And then I'm always just going to say, like you say, what people pick up on.
Speaker 2:Yeah, it certainly is.
Speaker 2:I just add one more thing, which is I guess I'm trying to be really, really careful with my language at this turning point, which is, you know, you look at the fundamentals, you look at the data and it looks like things are shifting around, but not saying whether that's good or bad.
Speaker 2:You know, as soon as you start to use words or phrases, green shoots and you know light at the end of the tunnel and this sort of thing. It implies like you're almost, you know, happy or positive or for some reason, will benefit from the market picking up. I guess trying to stay away from that language because we're trying to be totally objective and not saying whether it's good or bad. It just is what it is, because of course, you know somebody wanting to buy a house would love house prices to fall another 20% because they save some money, whereas you know, you know an existing homeowner probably not so pleased. So there's always two sides in the housing market And I guess just trying to stay really kind of neutral on that, just saying it as we see it is pretty important. So hopefully that came across as well. If interviews lasted that long to get that full context, sometimes they don't, so hopefully that came across anyway.
Speaker 1:I suppose that's the way. The difficulty with those interviews depending on what it is and where it is is that they might take a tiny little clip of what you said, or sometimes you do get the opportunity to have a good couple of sentences where you can fire through with that context And your good point in terms of it depends who's in the market, right? I think I made a similar point in the monthly video this month. Was that somewhere like Lower Hut, i think we were seeing genuine well, it looks like pretty genuine moderation and value falls. So I said that would be great for any homeowners that have seen their values fall 20% in the last year or 25% or whatever it is, since peak. But really making a point that you know, yeah, the fact that the gentleman is coming to an end is good for current homeowners who you know are not happy to see the value of their asset fall. But of course, yeah, like you're right, from a perspective of someone wanting to get into the market, they'll be pretty happy to see values continue to fall too. So, yeah, another good one that you know for broader context is important to point out and, like you said, keep the neutrality. You know this is good for many people in the industry that values are stopped falling, but for some parts, some people in the market, yeah, they're not in the same mentality. So a good distinguishing factor, korma. Well, let's move on as well.
Speaker 1:The other thing that you took the time with less data being released last week, was to look at some more internal data and really focus on what's happening from a rental stock perspective. So generally we talk about the number of properties for sale, both on the market right now and you know the flow of new properties being listed, or flow of properties being listed for sale each week. But we also track the number of properties listed for rent every week as well, so the total stock and the flow of new rentals coming to market each week as well. So sort of talking about what's happening in that you know rental market, how where's the power from a landlord to a tenant weigh in. You know demand coming from maybe migration as well.
Speaker 1:So you did take the time to do a bit of an overview of that, supposed to inform ourselves, inform our staff and, of course, in some of our conversations with our clients as well. It'll inform those discussions. Do you want to give us your sort of key insights from looking at that data, what it might mean, what we don't answer from it as well, and potentially, where you've seen some regional differences, to which, again, when we talk about how the market is shaping up going forward, you know, depending on what's happening from a rental stock perspective, might flow through to increased rents or otherwise, and that, of course, and flows through to a better viewpoint or a better attractiveness for an investor looking to buy properties in certain areas too. So, yeah, just your insights from your overview of the rental market, kelvin.
Speaker 2:Yeah, i guess the rental sector probably doesn't get the same profile as kind of the buying and selling side of the market. You know there's still a third of households are renting. It's a pretty big chunk of the market and probably doesn't get that same coverage. So always worth having a look at it. And yeah, let's say I looked at the rental listings data. It's pretty similar to what we are seeing in terms of that sales side of the market. So not much new rental stock coming to the market. So that new weekly flow of rental listings currently running sort of 15% below normal. Now a bit of a question about here to find normal again. But you know we are seeing a pretty low flow of new rental listings coming to the market So there's not much kind of circling around. It's even lower relative to normal in places like Auckland and Otago, maybe 25% below what you might think a normal flow of weekly listings would look like in that rental sector.
Speaker 2:We know that the Otago one within that you know, queenstown would definitely stand out. I've had a lot of the anecdotes about how it was almost nothing to rent in Queenstown. So I guess no surprise to see Otago region kind of popping up on this kind of analysis. But in general, you know we're seeing a very low flow of new listings coming to the market. Then what that's doing mechanically is eating into that stock of listings so you don't have much coming on to the market. You know you have that constant turn of properties being snapped up by tenants, especially with net migration high at the moment. So what happens is that not much is coming on. There's still a constant flow of properties leaving at the other end of the pipeline And so that total stock of properties available to rent at any point in time is pretty low as well. So that stock measure at the national level maybe sort of 30, 40 percent below normal. So it's pretty tight and even tighter and again, auckland and Otago, maybe 50 percent below normal.
Speaker 2:So yeah, a lot of those dynamics that we're seeing in the buying and selling segment is the same in the renting segment as well. So pretty tight out there and net migrations up, you know, and that's going to be eating into some of these properties. So really, when you look at it in terms of the implications for rents, you have to start to think this quieter period for rental growth could start to give way to a period of reacceleration, because it's just pretty tight out there. There's not much to choose from and any tenant who is certainly around looking for a place could be, could be facing up some higher rents.
Speaker 2:So yeah, and there's all sorts of regulation and legislation around competitive bidding and all that sort of thing. You can't do that anymore. So that's that's a factor. But still, you know, supply and demand will play a role eventually and we are seeing pretty tight out there at the same time as demands rising. So yeah, it's probably as a segment that doesn't get a lot of coverage, but right now it just does feel pretty tight when you look at those listings numbers.
Speaker 1:Yeah, it's a good flow on, i think, from last week when we talked about, let's say, strong migration and we talked about the rental index last week as well, which had seen a bit of an acceleration in growth in rental prices. I think we are always quite keen to continue to stress the fact that mostly over the long term, rental prices reflect the ability for people to pay, so their income growth as opposed to landlord costs. But I think it's worth saying that when there is tight supply, strong demand coming in, landlords and property investors of course are going to be more likely to say well, actually can I lift that rental price up a little bit more and test that market once you do have a vacant tenancy. Of course I don't think it necessarily affects when you've got good tenants because you don't necessarily bring them up to market And it's much more valuable for a landlord sorry to keep good tenants in a property And so often they will be under market. But for those that then go and get advertised, they will try and bring that up to market. They can test it, advertise at a certain rate. If it doesn't get picked up, you just reduce it down again. But given we know there's strong demand, people might be willing to go. yeah, ok, i've got to stretch the cost I'm paying in my rent because I just know that that's what's existing out there. I think on that same thing.
Speaker 1:I wonder and it's pretty hard to really distinguish this factor within the data but whether we are seeing fewer people leave their tenancy as well. So they know if they have got a pretty sweet deal, they know if they do look elsewhere that it might cost them a bit more as well. So that might also be holding the rental stock backwards. Because people aren't ending tenancies, it's harder for landlords to end the tenancy, but even from a tenant's perspective they are maybe less inclined to leave a current rental property, knowing that if they go outside they're already facing higher costs. What if I have to pay more rent? because they're going into a competitive market and we know that strong population growth, then that all flows through to higher values as well. So I do wonder if that's another key factor within this one that's keeping those overall stock levels down. As you said, it's probably likely that when rentals do get advertised, they're snapped up pretty quick because we know that demand for renting is also out there. So these are some key features that lead to the current situation and longer term, all that's going to mean is that squeeze on that price upwards, which is a step we did start to see in the rental index last week as well. So it's all kind of again makes sense. And then you put it further apart and say, yeah, probably also is another one that shapes that expectation that the value falls are coming to an end.
Speaker 1:And again, comparison to Australia. One of the things that our colleagues over there talk about is a very tight rental market with strong population growth, and it looks like ours is shaping up similarly to theirs And we know that I've been through some price growth off the back of that. There's still other factors that are different, of course. Their credit, their cash rate, is still lower than ours, although it is continuing to pressure upwards with sticky inflation. There are other factors low listings, both from a self-respective and rental type market there is leading to their market turning around, and why we do think that when we look at Australia and go, yep, some of our factors in the market are similar and getting towards Australia And that's why we do think that the market is coming close to this end of the downturn.
Speaker 2:Anyway, Yeah for sure. Yeah, I just think. And more generally, there's the sort of investment side of the market. What landlords are doing, what's happening to rents is going to be a real interesting topic over the next sort of six or nine months. With the election, maybe national winning, maybe interested in ability reinstated, maybe bright line short, and how long that might take.
Speaker 2:Even if they do win the election, how long is it take to push through that legislation? Does it apply retrospectively? Is it just for purchases from then on? There's a lot of interest in here and maybe with debt to income ratio caps as well, which will tend to hamper investors more, What investors doing this next little while is going to be really interesting, especially if, with rents potentially rising a bit faster as well, Does that change the sums for people? Can they get those sums to work? Can they start investing again? So there's a really interesting little part of the market which will not really that little, actually quite big part of the market which will be really interesting to watch over the next six or nine months. So it's only one be keeping an eye on.
Speaker 1:Yeah, yeah, greg, we'll have to do it on a regular schedule to make sure we do review it every month or two months or whatever it is, and included in public discussions. Maybe we'll get other data around rents and rental demand. Cool mate. Well, let's have a look ahead, then A few economic releases which maybe we can sort of wrap all in together. And then, of course, we got lending data for May coming from the Reserve Bank as well, with potential signs of increased activity. We know from our own data that there was an increase. Plus, we know that the high LVR, including more high LVR lending in anticipation of the changes which came in at the start of this month, even though this is May data, we know that Buffalo was in there from the banks. They might have increased their share prior to that change actually coming in.
Speaker 1:But from an economic perspective, calvin, we've got the New Zealand activity index for May coming out this week, also filled jobs for May. So in terms of economic activity, but this other side of things, which is the strength of our labour market, so maybe you can run us through your expectations there. And we've also got confidence data from both the business and consumers perspective. We know it's relatively low, but probably the thing that we've been looking for more interested in there is the expectations around inflation. So those are some pretty key economic indicators right Which are going to shape the Reserve Bank's thinking when they come to their next decision. And, of course, our hope and expectations is that there's no further to go for the OCR in the short term, but they're going to really feed into that mindset. So, yeah, can you give us your broad expectation on those releases and that economy side of things and how that might flow through to when the Reserve Bank is next meeting in the not too distant future?
Speaker 2:Yeah, it's actually quite a big week for data, isn't it, when you look at it like that? and the NZAC I suppose you know we gave us a reasonable, good insight into that recession in Q1, so People should be keeping a watch on that in terms of what it means for the economy in Q2. And you know The April number for the NZAC was a bit softer, so definitely one to be watching. And we'll get May's number this week. I mean, if May's number was a little bit disappointing as well, you'd be starting to think no, we are, we still in recession in Q2 maybe. So definitely want to keep an eye on if we do see that softer result. It, you know, won't be that encouraging from the point of view of climbing out a recession. So definitely want to keep an eye on filled jobs. They've been strong lately and you know support if you want to call it that for the property market. It's certainly preventing a bigger downturn effect that most people have been in work, so filled jobs have remained pretty strong. The run of jobs growth probably come to an end some time, for sure. But yeah, i think most indications are that probably jobs have continued to expand. So You know that could be a more positive reading that we get for the week Business confidence from A&Z on Thursday and then consumer confidence on Friday.
Speaker 2:Yeah, i think probably with these things, people Maybe necessarily paying so much attention to the actual confidence results because they've been weak for a long time yet GDP, you know, labor market, employment have just been doing almost something different to some extent. So I think maybe the actual confidence readings people aren't quite so tied up in and at the moment It's more about the inflation number and the inflation expectations figures that we get out of out of these surveys. They have been moderating a bit lately So, you know, maybe we see more of the same coming up this week. So, um, yeah, i think on the whole, when you look at those, those numbers, we might get a slightly disappointing NZAC result. We might have a still reasonably strong labor market result, but that's kind of more of the same. We might see some some further moderation inflation expectations. So if all that goes to plan, i think you do add that all up and you say, yep, that that adds to that sense that That the OCR is at a peak. You know the Reserve Bank won't need to do anymore because they're seeing an economy that's kind of just ticking over, maybe You know, tabling with recession and at the same time inflation is coming down. So you know, from the point of view of monetary policy it would be, it would certainly be supportive of that idea that that the OCR has peaked. So, um, yeah, that's, that's probably the overall expectation I'd have for those figures.
Speaker 2:And then the Reserve Bank mortgage lending numbers. Yeah, these are we really interesting because, as you say that these relate to May. But of course the announcement of lucer LVRs was made at the end of April, even though it wasn't coming till the start of June. There was a, there was a window there where the banks could potentially act early Because the announcement had been made, they knew it was coming, so they could and they had headroom at even at the old LVR rules, so or the old LVR speed limits. So, um, yeah, i and we already know that sales activity has been stronger in May as well. So you know I'm anticipating, within these figures We will actually see that in May Some more high LVR finance was made available.
Speaker 2:You know the banks raised that allowance And so you know, potentially could have helped some more first-time buyers into the market, for example getting in at that low deposit. So I'm gonna be interesting figures to look at to see whether that that has passed through to the actual numbers. And then, of course, from then on with with the speed limits having now actually been loosened, we'll see that come through and sort of during July as well. So that'll be definitely one I'm keeping an eye on for the week, alongside, alongside those kind of more kind of macro numbers, i guess.
Speaker 1:Yeah, absolutely Yeah. I mean for the lending. I suppose you know we were never really expecting it to have a loosening LVR. They have a major change in Demand or you know the banks lending, so I'm not expecting a dramatic lift, even from June. But that'll certainly want to watch, as you, how much of the banks been able to and wanting to Embrace those, those loosening of the LVR, as as we've talked about. You know, just because you can have less of a deposit means more debt. More debt at a higher interest rate It's pretty tough to service, so they could keep a natural cap on how many people actually can can make use of that, that type of lending Anyway. So that's why I don't think it's gonna be a major change.
Speaker 1:But, yeah, we have few months. We get a good feel on that anyway, but certainly want to watch the NZAC. Mate, i'll certainly be putting the pressure on you. We have two of the three months I want. I want an expectation next week of where we're gonna land from a GDP perspective for Q2 And whether we do think that recession has continued, based on our your calculation, using the NZAC to try and predict the final official GDP data. So yeah, we'll leave that on the list for next week, i reckon.
Speaker 2:Yeah, for sure. Yeah, well, gee, i mean, if it was simple, if April, if the April number got repeated in Bay and June and it was, it was uniform across the quarter And it would it would certainly hinted at a continued recession. So you know, we probably do need that NZAC to accelerate again to to kind of hint at pulling out of recession. But, as I say, if April's number continued, then, yeah, i think you'd have to, you'd have to start thinking extended recession.
Speaker 1:But you're just thinking, like everyone expected, that inflation, other, the economy would have a bit of a booth, obviously, from the increased government spending helping out of, you know, the the disasters on the East Coast in particular. So just you know, if that doesn't hasn't actually happened, then that that's might be one of the reasons we can get from this data too. So, yeah, it's gonna be interesting to watch for cool. Well then, anything from our perspective in terms of being released this week, you are taking a look at what we call the trade-up premium, essentially the difference in cost between, say, a three-bedroom property and a four-bedroom property, and how much that might Hinder the market turnover from people being able to to, you know, trade up in the market, which then can release properties at the lower end for first home buyers in particular, but also those investors who might be, you know, buying those properties to rent them out. Any tease you wanted to provide on that trade-up data you've been looking at, kelvin.
Speaker 2:Yeah, well, it's still not easy. I mean people who are looking to move up the ladder, and it's a proxy, it's a rough guide. We use a three-bedroom property up to a four-bedroom property. It might not in reality be what people are doing when they trade up, but it's one way we can get some insight into that. It's still pretty difficult. That trade-up gap is still quite large, but I suppose the tease is that it's come down pretty much everywhere. It's actually got a bit smaller in the last little while. So still not easy to trade up, but it's got a bit easier. Now. You've still got issues If you're adding on debt. Well, that's got to be serviced now at a higher interest rate than used to be the case. So there's definitely challenges there, but at least that gap has got a bit smaller And I suppose there's got to be some pent up demand there, doesn't there for people wanting to move around?
Speaker 2:They've been a bit uncertain for a while. They didn't know how long it would take to sell The conditional offers. I'll kind of get the finance. What might I find? what price am I going to get? So there's probably been a few movers, as we call them, or relocating owner occupiers who have just set, still just done nothing for a while. So you'd have to wonder whether there is a bit of pent up demand and whether the gap getting a bit smaller, people saying yeah, i could probably make that work now And some of that pent up demand comes out. So, having just said, i'll be watching investors pretty closely in the next little while, i suppose also watching movers. And is this a group that does start to become a bit more active into the second half of the year And we do start to see a bit more of people moving around, trading up, trading down, that sort of thing? So yeah, all that's covered off in the note And we'll see how it goes.
Speaker 1:Yeah, actually it's something that came up And I kind of want to know. We call it a fireside chat. I had it one of the banks last week where, rather than a normal market update but also the ability just to take questions and even look live at some of our data sets with this group, and one of the questions, of course, was what's happening with movers, and so it did take a quick look And maybe this will be a source of maybe more detail analysis in the future. But we certainly have seen, even though there's been fewer movers out there so we need to acknowledge again, there's fewer of them, but as a proportion those types of movers there's been an increase in those that have been downsizing. So it did make me wonder, and if we looked into it in more detail we might see it was people that may be upgraded through that growth of the market. They saw increase in their own property value, they had an increase in wealth, they took the opportunity to buy a more expensive property or buy in an area they previously couldn't afford, but maybe they have bitten off more than they can chew And now, when their mortgage is being refixed, they're actually having to downsize, or it could just be natural downsizes.
Speaker 1:We know we've got an aging population who might well be exiting the market, freeing up cash, but the line was quite distinct. There's quite a distinctive shift From the last probably year or 18 months, since they're part of the peak of the market. We're seeing a lift and downsizes as a share of movers And also a lift, which probably happened over a bit of a longer period, in those movers moving to different areas too, which again could be people for lifestyle reasons or aging reasons or whatever they've gone and moved, but definitely fewer people out there upgrading at the moment in terms of the dollar value of their property, which again makes sense when you think it's quite hard to bridge your finance. Do you want to exit the market, then come back in, or are you trying to own two properties or anything at the same time? So that can be quite difficult.
Speaker 1:So yeah, there's a little bit of not it won't be in that article that you've written, but just something that came up at the end of last week in a conversation I was having was is there that type of behavior happening And can we get a bit more detail around that one? So maybe that can be a source of an article and another week where there's not that much data coming out, but certainly an intriguing one, and one that's always great to be able to put some actual data to, because we hear it anecdotally, but always nice to actually put some detail on the data around it. So, yeah, one for the future.
Speaker 1:Yeah nice one, interesting stuff, cool man. Well, i think that'll close us out for the day. So thanks, as per usual, for your thoughts. We thought there wasn't much data out there, but always plenty to chat about. So I appreciate all that detail And just want to say thanks very much for listening. Please do make sure you hit that follow or subscribe button And do feel free to get in touch with us too. We're all available on Twitter, linkedin, and our email address is also sitting within the podcast notes. You are listening through us right now And I was going to say thanks again. My name is Nick, he's Calvin. You've been listening to Zilla Property Market Podcast. Matua colorful music plays.
