Property market Re-awakening Shows Latest ASB BANK Investor Confidence Survey
Investors perceive improved returns from residential property investments over the next year, reveals ASB BANK’s latest Investor Confidence Survey for the June Quarter 2001.
Residential property is perceived as the second best option in terms of ‘best returns’ lifting by four percentage points to 13% of respondents, indicating a re-awakening of investors perceptions. Investor’s return perceptions for residential property had previously been in decline for 18 months.
Chief Manager, ASB BANK Investments, Roger Perry cautioned against anticipating improved confidence flowing into a general lift in house prices.
“New Zealand population growth remains low, constrained by migration over the last two years, and interest rates are forecast to rise early next year. Furthermore, the returns that an investor in rental property can achieve at the cheaper end of the market have been dampened by the recent reduction in state housing rents.”
Meanwhile managed investments still retain their lead as the investment type which most investors believe will yield the best return, but this belief has declined for the third consecutive quarter and is now 20% of respondents, 5 percentage points lower than it was 9 months ago.
“World sharemarkets have dropped almost 20% over the 12 months to March 2001. World shares are a large part of balanced funds, which is probably why we’ve seen a decline in investor’s perceptions that managed investments will give the ‘best returns’.
In a special question this quarter, respondents were asked to say what if any changes they are considering making to their savings and investments in the next year or so.
“We wanted to find out whether investors were making any changes to their portfolios as a result of the fall in world sharemarkets last year and found they had not been,” Mr Perry said.
“Almost 65% of respondents are indicating no planned changes to their investments. This shows a continued mature approach by New Zealand investors who again appear to be taking a long-term view, particularly in light of the near 20% drop in world sharemarkets over the last year.
“A total of 33% of respondents were planning changes, but the profile of those people reflect changing lifestyles. They tend to be under 30 and are making changes for reasons such as buying residential property and to increase their savings for retirement. Just 2% of investors are making changes because of the shift in investment returns.
The ASB BANK survey shows that overall investor confidence remains steady with a net response* of 12% of respondents expecting better returns from investments over the next year, down slightly from 16% in the last survey.