Investor confidence in one region remained unchanged this quarter
The impacts of COVID-19 on the economy and the property market have dragged down investors' confidence to a four-year low in the first quarter of 2020.
ASB's latest Investor Confidence Survey has revealed that overall investor confidence in the country dropped from net +11% to net +4% for the three months ended March 2020, the lowest level since the first quarter of 2016.
Chris Tennent-Brown, a senior economist at ASB, commented that a significant decline in the sharemarket was enough to hit investors' confidence, and the economic shock caused by the lockdown had rattled investors further.
“While we don't have the full second quarter's data yet, we can see that sentiment remained very negative in April, even while markets were starting to recover. We know from our conversations with customers that investors are worried about the longer-term repercussions of COVID 19 on investments,” Tennent-Brown said.
“What's interesting right now is that sharemarkets are back near their February peaks, but we are expecting some pretty tough economic news over the coming months, so there is a mixture of influences on the mood of investors right now.”
Read more: COVID-19 hits housing confidence
On the bright side, investor confidence in Auckland remained stable this quarter, with net +6% of the respondents expecting a return on investments to improve in 2021. Views of the rental property providing the best return on investment also recovered slightly, with an overall increase from 13% to 15%.
“If it weren't for COVID-19, we think the property market would have had very buoyant autumn,” Tennent-Brown said.
“Instead the economic fallout from COVID-19 has dashed expectations of the housing upswing carrying on through the remainder of 2020. Our separate Housing Confidence Survey is now closing in on eight-year lows for sentiment, and we expect prices to soften over 2020.”
