Investor confidence in property slips

Investors are showing less enthusiasm for rental property but attitudes to other classes of investment are rebounding, a quarterly ASB survey shows.

The ASB March quarter investor confidence survey shows a net 23 per cent of respondents were expecting a better rate of return over the next year, a fall of 7 percentage points from a record high in the December 2009 quarter.

The decline was partly due to rental property losing favour but largely because it was coming off such a big high, said ASB head of investment services, Jonathan Beale.

Rental property was still the favourite investment, with a net 17 per cent of people believing it still offered the best rate of return.

But it was down one percentage point and was now very close to bank savings accounts and term deposits at 16 per cent.

Term deposits rose 4 percentage points, which ASB surmised could be due to the recent pickup in interest rates.

Managed investments came in at 10 per cent, shares at 8 per cent and KiwiSaver at 6 per cent.

Mr Beale said that as the recession faded, all investment classes except rental properties were being viewed more favourably.

In particular, "managed funds have done well over the past 12 months as they recover from the slump and investors are starting to see their value as a long-term investment option".

He expected confidence in the second quarter to be shaped by debt developments in Europe and certainty at home following the Budget.

The survey also showed the uptake of KiwiSaver was at its highest point yet – up 2 percentage points to 37 per cent of investors in the survey.

While rental property is losing favour with investors, bond information reveals that rents are on the rise.

Nationally, rent for a three-bedroom house nudged up $5 a week to a median of $315 over the six months to April, compared with the same period to March.

One-bedroom apartment rents rose from $290 to $295 a week, the Department of Building and Housing said.

The figures also indicated there were fewer people moving about in the three months to April, with 27,570 bonds received, compared to 27,886 for the March quarter.

- © Fairfax NZ News