One of the questions at the moment is whether property investors are selling up post the Budget or continuing on?
Reading the headlines there are conflicting views. Our survey at Landlords.co.nz shows that very few investors are planning to quit the market due to the removal of the ability to claim depreciation and changes to LAQC rules.
However, others suggest that there is a sell off happening.
Of course I will be a little subjective on this and say that our survey sums up the mood of the market pretty accurately.
We are finding little evidence of a mass sell off and looking at real estate listings it doesn’t appear landlords running for the hills. Indeed if you look at REINZ’s numbers today it is becoming more of a buyers’ market and investors will be in on the action.
It was suggested that maybe the survey is a little skewed as readers of the NZ Property Investor Magazine and Landlords.co.nz are, let’s say, a little more professional and do some more research on their investments than others. (I couldn’t possibly comment).
Then there was this story yesterday that residential property investors in Canterbury are quitting “en masse”.
A sale of 20 properties in a metropolitan city doesn’t seem like en masse. On closer inspection the story is actually good news.
Investors are selling for a variety of reasons. Some of them are getting rid of underperforming assets. Others are highly leveraged and have investments don’t stack up. Others have had bad experiences and poor advice.
What is good about this? The fact that investors are getting rid of non-performing assets is good. Why continue to hold onto a dud? Maybe these people will buy more property? Yes, the Budget will force out some people who probably shouldn’t have invested in property in the first place.
As for whether there will be a wholesale exodus from investment property I say no. Many people like property as it is an investment they can touch and feel and have control over. In fact it is one asset class where the investor can actually add value.
Many investors have no desire to put money into shares, bonds and finance companies – partly because they do not trust the people who run them and they can’t “see” what happens to their money.
Agree. Owners that de-leveraged or adjusted rental to improve equity and yeild are in an improved position compared to a few years ago. Having been bitten with shares and so called "professionally managed funds" over the years, I concluded property investment, where you control the asset and add value are best for me!
On 16 June 2010 at 1:49 pm Christopher said:
Perhaps we can now put a brake on all this unrealistic nonsense about investors being hard done by by the budget, quitting the market and quittting New Zealand for greener (or dusty brown if they had Oz in mind) fields. There is more in the economy influencing peoples' buying decisions than depreciation and LACQ's. Buying a property on the basis of making a loss with an over compensatory capital gain is not a good long term strategy - who knows, an enforced capital gains tax after the next election could be next ?
On 16 June 2010 at 9:47 pm Alana Brown said:
As always a paper is sold by it's headline- what better headline than the budget is effecting property investors,
and they are selling their properties. It has been said that too much debt is in property and it should be invested
in the business section.
So less of the hype and more on the facts.
Some people who are highly geared will feel the pain , some will sell but most will hold.
It's better than shares or managed funds , and for me I
have control of my retirement fund!
Alan Brown BComm Mint Advisors
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One of the questions at the moment is whether property investors are selling up post the Budget or continuing on?
