More than 24% of existing property investors say they thinking about another property purchase in the coming year.
Investor interest in buying a new townhouse is back on its upward trend. The preference amongst those thinking about buying an existing property is strongly in favour of a standalone house.
The research highlights multiple different trends and patterns across the residential investment property sector, such as:
- Almost 90% of investors with mortgages coming up for renewal intend fixing for one or two-years;
- Increasing interest rates are not driving accelerated debt reduction of residential property investors;
- The peak period of difficulty getting finance from banks was between October and February. Things have improved since then;
- As ever, the biggest concerns of residential property investors are the new Government regulations favouring tenants and loss of ability to deduct interest payments from rental income;
- Usually there are more people citing selling for retirement than for any other reason, and that remains the case this month for 37% of survey respondents;
- Interest rates for bank deposits remain low as an alternative investment option; and
- The most common rent rise being contemplated by landlords is five percent.
Bayleys Canterbury residential investment leader Angela Webb says feedback from within her group’s buyer and vendor databases replicated the sentiments from the Investor Insight report.
In response to the underlying investor buyer demand Bayleys is running an investment auction on 4 August in Christchurch, bringing together 10 residential properties for sale.
Properties within the portfolio range from two- bedroom flats, through to six-bedroom student rentals, a community leased stand-alone house and an ‘as is, where is’ property.
Some of the homes are already tenanted – with the tenants indicating their intentions to stay on under any new ownership – while others have been made vacant so new owners can set their preferred rental rate.
A number of the listings have the opportunity to add value by reconfiguring layouts or undertaking refurbishments, while others are in a ‘turn-key’ state ready for new tenants.
Webb says most vendors are taking advantage of the considerable capital growth which has been achieved on their asset over the lifetime of ownership, and are now crystalizing that gain.
“Some have indicated they will use the proceeds to fund international travel, some are looking at paying of their personal home mortgages, and others are looking to pay down debt for retirement,” says Webb.
On the other side of the equation, Webb says the group has a strong network of ‘qualified’ first-time investors and experienced investors saying they are looking for ‘bricks and mortar’ investment assets in the city rather than the higher risk options offered by the share market, or the low rate of return options offered by bank deposit accounts.
“Owning residential real estate in Canterbury for investment purposes still remains a fundamentally sound decision when you look at the figures,” she says. In most cases, the yield will be higher than bank deposit interest rates.