Slowing market isn't stopping investors: Survey

Property investors are still looking to add to their portfolios, despite a slowing market, and many are planning to diversify their investments.

Saturday, March 25th 2006, 12:00AM

by The Landlord

These are some of the latest findings of the annual ANZ/New Zealand Property Investors Association survey released today.

The survey, which is in its third year, provides a good snapshot of the property investment market.

Only 1% of respondents expect prices to continue to increase at the rate of the last two years, while more than 40% expect prices to stagnate or fall.

Yet close to 90% of investors plan to buy a rental property in the next five years and 49% had added to their portfolio in the last year.

"Those that are intending to buy appear to be long-term investors and not purely involved for the speculative element that the Reserve Bank has repeatedly warned about,” ANZ acting chief economist Cameron Bagrie says. Property remains a solid long-term investment for the savvy investor and for the majority of investors that will be in residential property.

“Land is a scarce resource and New Zealanders have a love affair with houses.” Bagrie expects the investment property market to keep bubbling along.

The proposed KiwiSaver superannuation scheme will give new home buyers a leg up, and residential property still has considerable tax advantages relative to other investments, he says.

The few that aren’t planning to buy more properties are not disillusioned with the property market - they are simply getting older and heading towards retirement, Bagrie says.

Investors new to the property market in the last two years have two concerns: that prices might drop and the quality of the tenants they may be able to attract.

Longer term investors are more concerned by lower rental yields, though more than one in four say they have no worries about their property portfolio.

The median (half those surveyed have more, half less) holding for all property portfolios is $900,000, up slightly on last year’s $860,000. The median gross income is $47,000 ($45,000) generated from 3.3 rental properties. The median total equity is $405,000 ($395,000).

NZ Property Investors Federation president Craig Paddon says the survey shows there is ongoing confidence in property as a long-term investment.

“Many of our members see property rentals as a long term income, once debt is repaid, with capital gains being a secondary benefit. That perspective is often overlooked by commentators who focus solely on property prices.”

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