NZ investors' love affair with rental properties appears to be fading

The 2010 first quarter report indicates that investor attitudes are changing as the recession fades and as speculation mounts about loss of tax breaks for property investors in Thursday's budget.

"Markets are gaining some stability and the doom and gloom of the recession recedes," said ASB head of investment services Jonathan Beale. "All investment classes surveyed, with the exception of rental properties, shifted upwards in favourability as offering the best rate of return. Investors are now looking at a range of options to get the best returns they can on their capital. They are also more measured in their outlook."

This is reflected in investor confidence simmering down from record highs late last year. A net 23% of investors are expecting a better rate of return over the next 12 months, a fall of seven points since the December 2009 quarter.

About 17% of investors regard rental property as offering the best rate of return, though the gap over bank savings accounts and term deposits; both at 16%, has shrunk.