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Bearish sentiments

Thursday, July 17th 2008, 12:22PM 1 Comment

by Philip Macalister

I know there is a lot of negative sentiment out there about the property market at the moment, but I was a little bit surprised to see just how bearish sentiment is.

The ASB Investor Confidence survey, out today, shows that investors no longer think residential rental property is the asset class which will provide them with the best return. Rather, rental property has fallen off its lofty peaks and is now level pegging with bank term deposits and savings accounts.

It seems there are a couple of factors at play here. One is that banks are being incredibly proactive at the moment, pushing their new savings accounts, which are particularly appealing under new tax rules to people on 39c tax rates.


The returns being offered for essentially low risk, liquid investments are up around the 9% range. Pretty attractive.

Another factor in the mix is that the media have been highly bearish on the property market and running plenty of stories about individuals or families who have taken a haircut on their property at sale time.

This is something the real estate industry picked up on a while back, claiming that the media was talking down the market. (Maybe these journalists are keen to get the market themselves!)

There is no doubt the market has changed from where it was a year ago, or even six months ago. The point which is worth making is that when markets are down, and this is any market, that is the time astute investors (and the ones who make lots of money) start buying.

Most people tend to operate the opposite way and buy at the top of a cycle and sell at the bottom. I can understand why this happens (and have even done that myself), but to me we are entering a time when people should be actively looking for opportunities to invest – whether it be property or shares. Those with the courage (and the money) will be thankful that they did so in a couple of years time.
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Comments from our readers

On 25 July 2008 at 4:51 pm Hamish said:
I think you might be right, by the time you hear about the next big thing to get into with your money from the majority is probably exactly the time when you shouldn't.
Commenting is closed

 

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Lender Flt 1yr 2yr 3yr
AIA 4.55 3.19 3.19 3.49
AIA Special - 2.69 2.69 2.99
ANZ 4.44 3.15 3.25 3.85
ANZ Special - 2.65 2.75 3.35
ASB Bank 4.45 3.19 3.19 3.49
ASB Bank Special - 2.69 2.69 2.99
Bluestone 4.44 4.44 4.44 4.44
BNZ - Classic - 2.65 2.69 2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.25 3.29 3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union South 5.65 4.75 4.75 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.60 2.65 2.80
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 3.99 2.58 2.68 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.40 3.54 4.00
Kiwibank - Capped - - - -
Kiwibank - Offset - - - -
Kiwibank Special 3.40 2.65 2.79 3.25
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Lender Flt 1yr 2yr 3yr
Resimac 3.49 3.45 3.39 3.69
SBS Bank 4.54 3.29 3.19 3.49
SBS Bank Special - 2.79 2.69 2.99
The Co-operative Bank - Owner Occ 4.40 2.79 2.79 3.39
The Co-operative Bank - Standard 4.40 3.29 3.29 3.89
TSB Bank 5.34 3.59 3.49 3.79
TSB Special 4.54 ▼2.65 2.69 2.99
Wairarapa Building Society 4.99 3.75 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - 2.65 2.69 2.79
Median 4.55 3.22 3.22 3.44

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