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Best investment returns from rental properties

New Zealanders' investor confidence has softened of late but investment returns from rental properties have not, a new ASB report reveals.

Monday, July 31st 2017, 11:00AM

by The Landlord

The three months to June saw a slight drop in investor confidence to a net +23% positive from 25% last quarter, according to ASB’s latest Investor Confidence Report.

Despite this, confidence remains relatively high overall and significantly above the low of +3% recorded at the start of 2016.

ASB senior wealth economist Chris Tennent-Brown said the softening of confidence could reflect a degree of caution as New Zealand heads to the polls in the September general election.

“It’s understandable to see some caution in the market as people ponder policies that will impact them, such as changes in the retirement age and tax rates, as well as the various policies that could impact the housing market.”

The high valuations of some asset markets could be another cause for investor caution, he said.

However, the softening in investor confidence has not impacted on the popularity of rental properties as an investment.

In fact, when it comes to investments providing the best returns, rental property has moved up a notch to match home ownership on 21%.

Tennent-Brown said that while the Auckland market has driven the increase in the perception of rental properties as providing the best returns, the increase is also occurring nationally.

“Auckland continues to experience strong population growth, and in turn, strong demand for accommodation.

“Rental data suggests that rents have been on the rise in Auckland this year, with stronger increases than elsewhere. 

“We think the increased rents are behind the improved sentiment regarding rental properties, given that prices appear to have plateaued, and lending restrictions are also a challenge for investors.”

After housing investments, the next best options for investor returns were term deposits (12%) and KiwiSaver (9%).

But investor sentiment for shares fell from 7% to 6% over the quarter.
 

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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 ▼3.39
ANZ Special - ▼2.55 ▼2.69 ▼2.79
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 ▼2.69 ▼2.75 ▼2.99
The Co-operative Bank - Standard 4.40 ▼3.19 ▼3.25 ▼3.49
TSB Bank 5.34 ▼3.35 3.49 3.79
TSB Special 4.54 ▼2.55 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 - ▼2.55 2.69 2.79
Median 4.55 3.19 3.22 3.39

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