ANZ's 2013 Property Investment Survey shows 92% of residential property investors expect house price rises in the next year

ANZ's 2013 Property Investment Survey shows 92% of residential property investors expect house price rises in the next year

Some 92% of residential property investors see the potential for house price gains in the next year, according to ANZ's 2013 Property Investment Survey results.

ANZ's general manager specialist distribution Craig Moffat said residential property investors were confident about the property market but wary of the possible impact of new regulations.

The annual survey of property investors throughout New Zealand, run in conjunction with the NZ Property Investors’ Federation, asked about issues affecting the residential property market and where investors see the sector heading over the next year.

About 1400 people nationwide responded to the survey this year.

The survey showed 92% of investors expect property values to go up the next year, with the median increase expected around 4.3%. Ninety-eight per cent of investors expected increases over five years.

Risks such as tenants defaulting, properties remaining vacant and not meeting expected returns were seen as less important than in previous years.

Moffat said the responses underlined the importance of property investors being realistic, taking a long-term view and managing potential risk.

"Investors see property as a long-term investment, with almost nine in 10 planning to hold on to their properties for the long term, and accordingly they have to pay attention to business fundamentals and cash flow management.

"Managing potential risks is always important, and the risk of interest rate increases is up from 18% last year to 28% this year.  But the main risk perceived by investors is overwhelmingly government regulation and tax changes."

Investors’ response to Reserve Bank restrictions on high LVR lending was very much “wait and see”, Moffat said.

"The survey was conducted just before the Reserve Bank announcement, but it had been widely signalled. What we were seeing is a high degree of uncertainty among investors with 84% saying they don’t know what it will mean for them. Only 16% thought it would impact their strategy."

Debt ratios are about the same as last year with only 8% of investors having LVRs over 90% and less than a quarter having LVRs over 75%. One in 10 investors are totally debt-free. 

Here is a summary of the main points in the survey:

• 92% expect property values to go up in the next 12 months (compared with 87% last year, with the median increase at 4.3% versus a median 3.1% increase expected last year) • 86% of investors are expecting annual rental growth, with the median expectation of 2.5% unchanged from last year. Rents were not expected to keep pace with property values, with a median expectation of 6.2% rental growth over the next 5 years. 

•61% plan to buy another property at some stage, with 49% intending to buy another property within two years.

• 48% see government regulations and tax changes as the main risks to property investors (up from 37% in 2012). This may also be capturing the Reserve Bank’s new macroprudential policy initiatives limiting high-LVR lending.

• The proportion identifying interest rate volatility as a key risk is up from 18% last year to 28% this year.

• Investors expressed a high degree of uncertainty about LVR changes, with 84% saying they don’t know what it will mean for them. Only 16% think it will impact their investment strategy. Note: the survey was conducted just prior to the RBNZ announcement

• Around half of investors do not believe LVR changes will affect their value of their properties. 23% think it will affect the value of their properties – though by no means all thought the impact would be negative – with lower-end suburban houses being most (negatively) affected.

• The proportion identifying increased insurance premiums as a key risk was also up, at 37%, compared with 23% last year. This likely reflects the move to fixed value insurance policies, which has resulted in higher premiums for most.

• Just under half (46%) of Canterbury property investors said the quakes had made them reassess the attractiveness of being a property investor, versus 28% nationwide.

• 61% of investors this year (48% in 2012) say they have examined their insurance cover as a result of the Christchurch earthquakes. This may partly reflect an element of compulsion from the move to fixed value cover policies by most insurers.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

26 Comments

Comment Filter

Highlight new comments in the last hr(s).

Vultures

Angels

Realists

 Financial Rapists.......and not in the business of benevolence, would forecast out of concern for their equity, get up horsie once more round the track, go you good thing.

Absolutely ! ... and in Germany , where they don't have a housing crisis / bubble , there's more of these wonderful angels providing an essential service to tenants ...
 
... fewer folk own residences there , more prefer to rent , and to invest their money into productive businesses , instead ...

I think the word you were scrambling around for is LEASE. Not owning your own home in Germany is a lot more like owning your own home compared to here where in the main, you just rent a roof over your head. Unless and until the way houses are rented or leased bears any resemblance to the way it is done in Germany I am afraid that investors will continue to be looked at for what they are - vultures.

Lest I'm seriously more confused than usual , but aren't the Ollie Newlands of our little world , the ones you're labelling as " vultures " , providing a valuable service within the accommodation industry , and operating within the legal framework which our beloved leaders in parliament have established ?
 
... if not , the police goon squad and choppers ought to be relocated from Kim Dotcom's estate perimeter , and to create " ground zero "  outside Big Daddy's office !

Accommodation industry - to me that's motels, hotels and backpackers not homes!

... to folks other than your good self , about 1.5 million of them , accommodation industry is their freely chosen rental abodes ...

@ Zanzayne if house prices and incomes for the bulk of people bore some relation to each other there would one hell of a lot less need for your "essential (self) service"

Vultures

Angels

There's too many Ollie Newlands and Ollie Newland wannabes - vultures

Angels ! ... keeping Kiwi families snug , dry and warm .. ..

Oh now I know you are joking, hahaha

Ask Mr Newland or Dad Biggy if their tenants are not snug as a bug , toasty warm , safe and happy at night !

ANZ's 2013 Property Investment Survey shows 92% of residential property investors expect house price rises in the next year.
NZ dept of Statistics Intelligence Average Survey shows a whopping 82% of the population sampled were of below average intellegence, guided by 10% who were of average intelligence, while the remaining 8% made up of recent immigrants declined to participate.
 

According to Stats NZ estimates on the below link there are approximately 485,000 rentals and 71,700 free houses and 1,123,100 owner occupied. Total housing 1,679,800 and an estimated population of 4,470,800 June 2013.  Of course property investors will be thinking there will be house price rises.
 
http://www.stats.govt.nz/browse_for_stats/population/estimates_and_proje...
 
For those that can't afford a home you could buy a section and plonk a few these on and add a little creativity.
https://www.google.co.nz/search?q=shipping+container+homes&client=firefo...
 
 
 
 

Section? You mean one of those things that generally come, these days, with a list of covenants as long as your arm, telling what you can and can't build.
Don't get me wrong I believe covenants are a huge part of the unaffordable housing thing and would welcome absolutely people being able to put containers or Leisurebuilt type homes on them, so long as they are tidy, what's the big deal - google Seaford Park Waihi for a look at what I think is the future, or hope anyway

You hope that's the future? Paying $3000/sqm for construction costing under$1400/sqm on a tiny leasehold site? They do have 'designer kitchen' with a 'frig' and a 'tan deck' but sadly the 2 bed units garage is too short for a car. Oh well.

No the micro housing aspect of it. 

I'm yet to encounter a landlord who actually invested in their property. None have actually been investors, all have been scraping by on the minimum level of maintenance in the hope of tax free capital gains. 
 
Its a farce to maintain that landlords are in it for the philanthropy. If this was the case then none would complain about any capital gains they made being clawed back. I mean, landlords in it for the love are really just happy to build up their social capital, right? And of course they don't charge market rents, preferring to charge a 'living rent'
 
The sooner minimum rental standards and rental WOF's implemented, the better. Those landlords who are providing an essential service should be clamouring for this change.

Consider yourself encountered.  Noticable levels of repair and work. double glazing. full insulaton before it was demanded. heatpump inverters.

However all that stuff costs, and not every customer wants to pay for the service the receive, nor are many happy to do proper maintenance let alone good levels of maintenance.

How many other business operate at a true loss for "social capital" (without passing the cost on to customers).  How many of them offer true free maintenance and supply of their goods, or deliberately offer their business below market rates (without compromising for quality or as a drive for marget share).

I went to the dentist the other day - he charged me way more than just consumables.  As did my last doctors visit.  Chefs and wait staff don't work for free (bloody near almost with the pathetic wages in hospo).  

Why should a landlord operate his business at a loss?

Then put up your rent to a level that recoups your costs. Pretty simple answer really.
I don't recall advocating that landlords should operate at a loss.
But as some here suggest that landlording is proving an 'essential service' rather than what it actually is for most, which is a marginal business only sustained by the promise of capital gains and tax right offs.

My tenants are quite comfortable with their current rent payments, and they have lives too, and their wages haven't gone up much.   Once in every few years I'll adjust to cover the increase in rates gouge, or to recover increase insurance cost.
 So it is a marginal business, like any sharp/skinny business endeavour.  I put in a few things *I* believe in, and life goes on.  

If I have to start buying stuff/hiring for compliancy then my margin is removed and I have to pass on those costs.

And yes you did advocate landlords operating at a loss, as that's what this is:
"...all have been scraping by on the minimum level of maintenance in the hope of tax free capital gains. 
 
Its a farce to maintain that landlords are in it for the philanthropy. If this was the case then none would complain about any capital gains they made being clawed back. I mean, landlords in it for the love are really just happy to build up their social capital, right? And of course they don't charge market rents, preferring to charge a 'living rent'
 
Many do charge "living rents", and hold the bar down for the others.  You want fancy buildings with all the do-ups (WOF) then everyone is going to be paying _much_ higher rents....higher rents means that the ROI is better, which is a fulcrum point on the issue of leverage, so the price of "cheap" buildings would skyrocket.  Not only that but higher rents has a double whammy.  Higher rents is better yield (higher projected cap gain, yes) but more iumportantly it gives better cashflow, which translates directly into better ability to service leveraged debt....and for those who already have a couple of properties than is oil jackpot situation as their existing equity just skyrocketed AND their ability to service from low leveraged existing holdings has improved (market rents shifted up, outgoings minimal).  That double whammy...with double set of "upsize me"...prices will hit the roof......AND! those rising prices will translate straight into annual yield figures for property investment making it a hot market.

But if you don't think it's an essential service, go live on less than the average wage and live in a cave for free (since you can't even live in a garage like I did to get ahead when I was on the benefit...)
 

Would be interesting to see survey result next year. My take is the such confidence will not last long! When LVR was raised from 10% to 20% in 1996 in Singapore, the over heated property market slowly came to a halt. Most private properties lost 50%-70% of their peak values in 1996. The property market languished for almost 8-9 years...wasn't until 2005 or so that the market started a bull run again. Property market is cyclical...could this be a start of a bear cycle?