Ownership of rental properties has lost some of its shine as the preferred investment of choice - particularly with the young, according to the ASB's latest investor confidence survey for the June quarter.
ASB's head of wealth advisory Jonathan Beale said that the previously top-ranking option of owning rental properties had dropped in popularity from 19% of survey respondents seeing it as offering the best returns in March to 17% - now making it equal favourite with term deposits.
"This is the first time in three quarters that nationwide rental property has not been viewed as the asset solely most likely to provide the best returns for investors. Optimism for returns on rental property may have been affected by talk of an over-heated house market and the RBNZ reaching for its macro-prudential tools," he said.
"What is also of interest is this quarter we started to see the emergence of a property divide between young investors and the not so young investors."
Investors aged 18 to 29 years perceived KiwiSaver as offering the best returns with it peaking at 17% of respondents, while their optimism for rental property declined 7 points to 14%.
However the 40-49ers had a surge in confidence in investment property with the numbers favouring it jumping 9 points to 28%.
"The inconsistent pattern across the age groups could be down to the old affordability chestnut," Beale said.
Looking at overall investor confidence, this has dropped from a two-year high as of the previous survey.
The ASB Investor Confidence Index fell 7 points from a high of net 18% (seeing better conditions) in the previous quarter, to a net of 11% in the three months to June.
Beale said, however, that investor confidence had actually dipped to a low of 3% in April, before recovering during the remainder of second quarter.
"When we look back to see what events might have caused the decline in confidence, it appears that it was related to uncertainty about events overseas rather than local issues. The situation in Cyprus was receiving a lot of air time earlier in the year, so clearly there was a knock-on effect for investors here as it may have been weighing on their minds," Beale said.
One of the investment options seeing a strong move toward favouritism in the latest quarter was share investment, with with respondents’ expectations that public shares will have the highest returns jumping up 2 points to 12%.
“Shares have surged and are clearly in the sights of investors as they seek higher yields. That level of confidence in return on investment from public shares has not been seen since the beginning of 2007," Beale said.
Meanwhile, net investor confidence in the Canterbury region remained stable at 20%.
"This is the second quarter that confidence has been higher in Canterbury than the rest of the country. The gathering rebuild momentum is clearly boosting investor confidence in Canterbury. At the same time, it is highlighting the growing gap between Canterbury and the net confidence of the rest of New Zealand, which is down 7 points to 10%."