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Investors remain confident in property

Restrictions on high loan-to-value ratio (LVR) lending have had a major impact on the strategy of many property investors, a new survey shows.

Monday, October 16th 2017, 1:00PM

by Miriam Bell

In the 2017 ANZ Property Investment Survey, which was released today, 47% of investors said that the limits on LVR lending have significantly impacted on their strategy in the last 12 months.

This is a significant increase on previous years: In 2016, 31% of investors were feeling the impact and in 2015 just 16% were.

LVRs are the biggest regulatory concerns for investors and government regulations are the second biggest concern for investors in 2017.

However, damage to property was the top concern, with meth contamination being the single biggest concern for investors.

Forty-eight percent of investors view meth contamination as a risk, which is a 10% increase on last year.

Despite their concerns, investors remain confident in the future of the sector, with 74% expecting positive changes in property values over the next five years.

Further, 50% of investors expect positive property value changes of 2.5% to 10% in the short term.

However, this is down from 62% in 2016 and reflects a majority view that there is going to be slower growth in both property prices and rental incomes in the near future.

The survey found that only 3% of investors expect property prices to increase in the 11% to 20% range, compared to 19% in 2016.

Those who expect zero growth over the next year has risen from 3% in 2016 to 13%.

Likewise, 19% of investors are expecting zero growth in rental income in the short term, which is up from 19% in 2016.

But 92% of investors still expect rental income to increase or hold steady over the next year.

ANZ head of mortgages Glenn Stevenson said the survey results suggest that an inflection point has been reached in the market.

“While most investors continue to expect positive changes in property values over the short and medium term, and in rental income, expectations of growth have moderated considerably since last year’s survey.”

Yet the survey also reveals that investors remain strongly committed to the sector, with almost 70% of respondents indicating they would buy again.

Auckland investors emerged as the most likely to buy again, with 61% saying they planned to buy again in the next two years.

“Off the back of a strong housing market, many of these investors have been delivered a free kick in terms of improved LVR positions from asset price increases,” Stevenson said.

“This will have created potential room for them to consider buying further property in the future.”

Buying and holding for the long term remains the number one strategy for investors across the country with renovation-develop and hold the second most popular strategy.

However, 20% of investors said they have changed strategy in the previous 12 months, with 25% becoming more aggressive and 35% becoming more conservative.

 

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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 ▼3.49 ▼3.49 ▼3.49 ▼3.49
BNZ - Classic - ▼2.55 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

Last updated: 13 July 2020 7:38am

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