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Property investment gets reality check

Property investment is clearly losing some of its sheen with Kiwis judging by the results of this week’s ASB Investor Confidence survey.

Friday, October 31st 2008, 12:00AM

by The Landlord

Rental property has fallen from being the investment most likely to produce the best investment returns to number three in the survey behind term deposits and bank savings accounts.

Until recent quarters rental property totally dominated as the best returning investment option with around 22% of respondents saying it was the investment class that would produce the best returns. In the latest quarter it has fallen to 15% which is a couple of points off its all time low which was recorded in the middle of 2002.

What is no surprise is that people are embracing term deposits, especially with banks. This type of investment is likely to go much higher in the survey as the most recent one was done before the government announced its deposit guarantee scheme.

ASB Head of Investment Services Jonathan Beale says rental property has “come off quite dramatically” in the survey.

He says its fall is a reflection of the down turn overall in the property market.

“It’s a bit of a reality check,” he says, especially for people who entered the market in the past five years and thought that real estate never goes down.

What’s more he expects rental property will fall even further in the next survey, but that it will start recovering as a good returning investment option next year.

While the overall view in the survey is pessimistic for property, Beale says there are signs that things are turning already. He reports that ASB is seeing more enquiries from property investors and those with money and medium to long term investment horizons, are starting to buy at the moment.

“While the attraction of rental property has fallen a net 9% from its long-standing heyday of between 2003 and early 2007, it still has stronger support than mainstream investment options such as publicly listed shares (up a net 1% to 8%), and managed funds and unit trusts (down 1% to a net 10%),” he says.

« Will Ha have the last laugh?Private landlords to play greater role »

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Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 4.05 4.49
ANZ Special - 3.55 3.55 3.99
ASB Bank 5.20 3.89 4.05 4.39
ASB Bank Special - 3.39 3.55 3.89
BNZ - Classic - 3.49 3.55 3.89
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union North 6.45 - - -
Credit Union South 5.65 4.75 4.75 -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
HSBC Premier 5.24 3.54 3.54 3.69
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 3.97 4.05 4.39
Kiwibank 5.20 4.20 4.30 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.45 3.55 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.86 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - 3.39 3.45 3.89
Sovereign 5.30 3.89 4.05 4.39
Sovereign Special - 3.39 3.55 3.89
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.19 4.35 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.39 3.55 3.89
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.39 3.55 3.99
Median 5.34 3.99 4.07 4.39

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