Investors think Auckland property is overvalued

Kim Sinclair, from Crockers Property Group, says the results of this month’s survey indicate that many investors are taking a cautious approach to property prices.

She says this is further supported by the fact that 63% of investors surveyed are not planning to change their current portfolio stock in any way.

Just under a fifth of those surveyed are currently looking to buy, while the remaining 18% are currently planning to sell.

This indicates a fairly balanced supply and demand situation, although demand does slightly outstrip supply, Sinclair says.

“For example, most of those who are currently looking to sell think they are more likely to sell than a year ago.”

In her view, this more cautious investor behaviour sits in opposition to anecdotal tales of emotionally-based activity driving property prices.

“Rather I would say that prices are probably being driven by a combination of migration numbers settling in Auckland, first home buyers and foreign investors.”

Interestingly, Crockers market data also shows that interest in apartments has grown.

Sinclair says this can probably be put down to apartments being a more cost effective option for investors and first home buyers.

The Crockers survey also asked investors about their views on the potential impact of the Reserve Bank’s proposed changes to investment property lending rules.

Over a third (37%) of those surveyed think the greatest impact would be a restriction of fund availability for investors, while 27% think the greatest impact would be an increase in interest rates (27%).

Seventeen percent think they would be forced to borrow from alternative sources, but only 12% think it would discourage investors from owning large numbers of investment properties.

Sinclair says this probably reflects the main intention of the majority of the investors interviewed - which is to “sit” on their properties without further purchases.