Investors confident, planning growth

The latest ANZ Property Investment Survey, run in conjunction with the NZ Property Investors Federation, has been released. 

It was conducted via 1150 online interviews.

The results show investors are confident, have dropped their debt ratios from about 60% last year to 58.7%, and are in it for the long term.

But more than half said Government regulations and tax changes were their biggest worry.

When asked about the biggest risk to investors, Government regulations and tax changes were the main issues mentioned, by 57%. A poor return on investment was the next most common concern, followed by costs and issues with tenants.

More than half intend to buy more property within the next two years, compared to 49% last year, and a quarter plan to do so within the next six months. 

Expected rental growth in the next year has risen significantly from a median 2.2% in 2014 up to 2.7% in 2015. Investors expect property values to grow by 6.3%.

Investors in the upper North Island (particularly Auckland) have the highest expectations for value increases in the next year, but expect this to slow over the following five years.

More rental growth is expected in the longer term - investors expect a median 3.4% per year over the following five years. 

More than 80% said LVR restrictions had not affected their investment strategy and the majority said if the rules were removed it would have no impact on them. 

Sarah Berry, ANZ’s Head of Products, said: “Through a period of significant change investors are continuing to show a consistent strategy of holding on to properties and reducing their debt gearing.

“Rising property values are certainly helping to reduce leverage ratios but it’s also clear that investors are being responsible about gearing for their portfolios. This survey has again highlighted the importance of investors being realistic in their expectations, taking a long-term view in their investment strategy and carefully managing risk.”

There has been a significant increase in the use of property managers, up from 44% last year to 51% this year.

Almost 90% of respondents said they took a "buy and hold" approach to their investing. That was followed by 23% who said they planned to renovate and hold and 9% who want to subdivide and hold. A very small number said they planned to renovate and sell.