Investor sentiment returns to residential property

By Phil Boeyen, ShareChat Business News Editor

Monday 23rd July 2001

A survey of investor confidence shows managed investments continue to be considered most likely to return the best yield but residential property is making a comeback.

In the ASB Bank's June quarter survey of investor confidence residential property is perceived as the second best option in terms of best returns, lifting four points to 13% of respondents.

The bank says the result indicates a re-awakening of investors' perceptions relating to residential property, which had previously been in decline for 18 months.

However Roger Perry of ASB Bank Investments has 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."

While managed investments retain their lead as the investment type which most investors believe will yield the best return, this belief has declined for the third consecutive quarter and is now 20% of respondents - 5 points lower than it was nine 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 investors' perceptions that managed investments will give the 'best returns'," says Mr Perry.

The survey shows that overall investor confidence remains steady with a net 12% of respondents expecting better returns from investments over the next year, down slightly from 16% in the last survey.

Comments from our readers

No comments yet