The annual ANZ Property Investment Survey results (run in association with the New Zealand Property Investors’ Federation) have been compiled and I’ve just received my sneak preview. Nearly 2000 investors responded, which is a pretty good number considering what a disillusioned bunch most investors outside of Auckland have become! It has definitely been a testing few years after the global financial crisis of 2008. In fact many would say that the crisis hasn’t ended, with the USA in massive debt and European states wobbling precariously.
Perhaps surprisingly, ANZ consider the results of the survey to show a rising confidence among property investors. Despite the aforementioned financial balancing acts going on overseas, investors here are getting more keen to buy. Perhaps our low (for us) interest rates are finally having an impact? According to the ANZ, property investors are reasonably confident of short term gains in value and extremely confident in growth over a the next 5 years.
ANZ say that investors are taking property more seriously and treating it like a business, with a greater focus on cash flow and risk than capital gains. Rental returns are in the spotlight as the impact of losing building depreciation and changes to company structure take their toll. Personally, I don’t think it’s really hit yet and we won’t see the real effects until a year from now. Investors are claiming to have increased rents as a consequence of these changes although I’m always a little suspect of survey results from a group with a vested interest in the answers!
There are more property investors holding seven or more properties, more investors planning to hold long term and more repayment of debt. It’s all got very serious and business-like! Where are my 20% year on year returns of the boom days now? Tax issues are becoming a worry with 37% of investors responding as being of concern.
ANZ Property Survey Highlights
Size of Property Portfolios
The number of respondents with one to three properties shrank by 15% while the number of investors with 10 or more properties rose by 30%
Rises in Property Values
Nearly 90% of respondents expected values to increase in the next year, while rent increases are still a pipe-dream for most.
Loan to Value Ratios
Nearly 40% of property investors say they have paid of debt in the last year, mostly because of lower interest rates.
Property Insurance
Half of investors have reviewed their insurance. I reviewed my premiums today and nearly fainted. I doubt they will improve for some time!
Government Policy Impact
Nearly 40% see Government regulations and tax changes as the biggest risk for property investors. The possibility of a capital gains tax has not lessened.
Plans for future property investment
Nearly 90% of investors plan to keep their properties long term.
Summary
From the preview, it doesn’t look like there were any unexpected findings. The people that responded will be the survivors. If you made it through 2007-2012 with your portfolio more or less intact, then you’ve done well. I have seen many investors who were active in the boom go to the wall. Keep a steady hand on the tiller and steer straight. In the provinces, we’re unlikely to see huge growth in either rent or values but with these low rates, your cashflow should be healthy. Use this time wisely. Get your property management processes in order. Do repairs, add value, reduce debt, build a war chest or even pick up a bargain here and there!
