No let-up in Kiwis love for property
Tuesday 7 May 2019
Property investors get a bad rap and yet nearly half of New Zealanders believe property is the best way to generate wealth for retirement.
By Miriam Bell
That’s according to KiwiWealth’s first State of the Investor Nation survey, which looks at New Zealander’s perceptions of wealth and wealth creation.
It reveals that 79% of the 2,101 survey respondents have some form of investment savings, with the median investment portfolio worth $27,000.
The most popular asset classes to invest in were Kiwisaver (69%), savings accounts (62%) and term deposits (34%).
Yet the asset class that New Zealanders think will generate the most wealth for retirement is residential property, with 46% of respondents putting it first.
The survey also shows that residential property is the way many New Zealanders are saving for their retirement.
Fifteen percent of respondents had residential property investments. In contrast, just 3% had investments in commercial property.
New Zealanders also have the most wealth tied up in residential property.
The median investment value of those who have money in residential property is $500,000. For those with commercial investments, it is $200,000.
Kiwi Wealth general manager customer, product and innovation Joe Bishop says that property remains the prime investment focus and wealth indicator for many New Zealanders.
“Prices have continued trending up for quite some time now. Increases in many places have been staggering, so it’s no surprise why Kiwis’ love affair with investing in property continues.
“We’re still seeing no end to the long-term trend of low interest rates and competition between lenders for new business continues to heat up.”
It’s these trends which are likely to account for the fact that 57% of respondents remain confident in the performance of the New Zealand property market.
Among investors, 60% are confident in the property market.
In fact, despite the signs of a cooling housing market, 80% of respondents expect house prices to continue rising in the next 12 months.
Wellingtonians were the most optimistic, with 91% believing that house prices will keep going up in their region.
Aucklanders were the least confident about the year ahead for house prices, with 72% saying that prices would continue on an upward trend.
Christchurch registered 77% confidence, followed by regional New Zealand at 83%.
However, renters and low-income earners were less confident about the market and were also less likely to have investments or savings.
Bishop says that people in these groups are more likely to report living pay check to pay check, with very little – if anything – left over to save.
“But as history tells us, markets can and do correct, so the cooling of activity in places like Auckland and Christchurch will be seen as a positive by those waiting for the right time to get on the ladder.”
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Remember Auckland’s “halo effect”? Well, it’s happening again but this time it’s at play in the Wellington region as the capital’s market powers along.
Technology and changes to the way people work are set to transform the commercial property sector and investors need to be attuned to these developments.
The latest Reserve Bank lending data reveals investors borrowed more than $1 billion in March, the highest figure since November, but a 10% fall on the same period last year.