NZ Residential Property investment buoyant 2 Jul 2012
Residential property investors are in a pretty buoyant mood according to the latest survey.
The survey, conducted by landlords.co.nz and Mike Pero Mortgages shows that low home loan rates are making property investment attractive and that landlords have been increasing rents.
More than half of the 753 respondents (55%) said that low interest rates were making property investment more attractive and nearly two-thirds of those surveyed said that banks’ attitude to lending had become easier.
“Now is a good time to be looking to borrow money for a home loan or an investment property,” says Mike Pero from Mike Pero Mortgages. “It is a buyer’s market at the moment and the banks are aggressively competing for your business by offering low rates and upfront cash offers and incentives to change lenders.”
More than 40% of landlords had increased their rents in the past six months. Of this group 42.5% had increased rents between one and five percent and another 26% had increased rents by between six and 10%.
Overall the majority of respondents expect that rents will keep rising in the next six months.
However, it’s a different story for interest rates.
Here property investors’ views correlate with economists, with the majority of investors not expecting floating rates to start rising until sometime in 2013.
Investors appear to be cautious and prudent around the management of their interest rate risks.
While there is an expectation that interest rates will not start moving upwards until next year, 23% of respondents had already shifted some of their home loans from variable rates to fixed rates in the three months.
Also investors have been taking a prudent approach and funnelled the savings from low home loans into paying off debt.
Nearly 70% of respondents said they had taken this approach, rather than using the money to expand their portfolios.
These findings show that residential property investors are being cautious and prudent with their investments, Landlords.co.nz publisher Philip Macalister says.
“Property investors aren’t gung-ho, speculators looking for a quick profit,” he says. “They are sensible and, in many cases conservative.”
He says rents are going up for two reasons. One is that investors are facing increased costs, such as rising insurance premiums, while they have also tax deduction benefits.
Secondly, in the absence of capital gains investors will look for income growth.
Other key facts to come out of the survey show that:
• 5% of respondents had bought investment property in the past month and 15.6% had acquired property in the past six months.
• Yet very few investors had sold any rentals recently.
• 11% of respondents expect to buy another rental property in the next three months and 16.7% are looking to acquire in the next year.
• It’s a roughly even split on whether house prices will stay the same or increase in the next six months. Half (50.3%) expect house prices to stay the same, and 43.7% expect them to increase.
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