Rental property rated second best investment for returns
Monday 7 February 2011
Despite falling house prices and sales, Kiwi’s love affair with rental property remains intact as it is rated the second best bet for investment returns behind term deposits.
By Benn Bathgate
The findings were revealed in the latest ASB Investor Confidence Survey, which found 14% rated rental property as the investment offering the best returns.
Term deposits held onto the top spot, with 21% of investors believing they offered the best rate of return, up 1% on the previous quarter.
"The results show that old habits die hard when it comes to rental property," said ASB head of private banking and wealth management Jonathan Beale.
"Even though rentals slipped steadily in popularity following the giddy heights reached before the recession, rental property remains a firm second when it comes to views on the best investment returns."
"This resilience prevailed despite falling turnover and house prices over 2010. But the gap is closing on other investment classes, perhaps signaling a longer term decline in investor sentiment. Only time will tell," Beale said.
The survey found that overall investor confidence has begun to rise, with the three months to December 31 seeing the number of investors expecting to see their returns improve climb 4% to 19%.
Beale said that while the economy went through a flat patch in the middle of last year, "confidence looks to have turned a corner again as the looming spectre of a double-dip recession fades."
Term deposits retained their top spot as most favoured investment choice, up 1% on the previous quarter to 21%.
While Beale said term deposits had returned to their highest level of popularity since the 2008 third quarter, he said the data indicated a dip in sentiment in December.
"Investors are likely to have been influenced by the December Reserve Bank announcement cautioning a slowdown on interest rates, which they again repeated in January."
The survey also revealed KiwiSaver has reached a record high in popularity, with 11% viewing the scheme as the investment offering the best returns.
"For the first time, KiwiSaver jumped ahead of managed investments and shares as the investment offering the best returns," Beale said.
"In addition, a record 61% of respondents indicated that KiwiSaver would be their primary means of retirement, a percentage which has steadily increased in recent quarters."
Commenting is closed
Moderate growth continues to mark house prices but the property market is now levelling off, according to the latest Trade Me Property data.
Restrictions and pressure on residential property investors keeps growing and many investors are looking for possible solutions: commercial property is one such option.
New Zealand’s lending environment has changed and investors need to approach it differently, ANZ’s head of mortgages has warned.