Survey reveals property investor caution

Property investors are eager to reduce debt and increase savings, mirroring the financial changes many New Zealanders are making, according to the latest ANZ Property Investment Survey.

ANZ New Zealand general manager of distribution Craig Moffat said: "The move by investors to manage their property investments more conservatively is a realistic response to the changes in the tax and economic  environments."

"Investor expectations of the short to medium term performance of their investments are generally not high."

The survey, which involved  almost 1000 property investors and  is run in conjunction with the NZ Property Investors' Federation, asks about issues affecting the residential property market and where investors' believe the sector is heading over the next 12 months.

The survey found the majority of investors expected just 2.5 to 5% growth in rental incomes over the next year.

NZ Property Investors' Federation president Martin Evans said expectations of capital gains in the foreseeable future had fallen, with 36% of investors not planning on purchasing another property at all - up from 24% in 2009.

"This reflects a reluctance on the part of investors to be exposed in the current economic climate to high levels of borrowing," he said.

The survey did find some level of optimism over the longer term however, with investors expecting double-digit growth in returns within the next five years.

"While investors are cautious, it is clear that most are in property for the long term, with 88% of respondents planning to hold onto their properties," said Evans.

"Most remain confident that well-kept, long term property investments achieving market rent will prove to be the most productive investment choice."