Tony Alexander's February survey highlights shifting investor sentiments
The latest survey from Crockers Property Management and economist Tony Alexander (pictured), drawing on 287 residential property investors, highlighted a growing trend of investors considering downsizing their real estate portfolios, marking a significant shift in strategy.
Market optimism and concerns
Investor sentiment about potential house price increases has grown, yet there’s a noticeable decrease in optimism about further interest rate declines, the survey found.
This mixed sentiment captures the current uncertainty affecting investment decisions, amid a backdrop of growing business confidence and renewed investor activity in the property market.
Furthermore, challenges in securing quality tenants persist, although banks seem more amenable to providing financing, marking a positive shift from previous tighter lending conditions.
Selling intentions increase
The survey indicated a shift towards selling, with 35% of investors considering this option, up from 29% in January.
This is the highest inclination to sell since mid-2021, suggesting a cooling period in investor engagement that could impact the market dynamics.
Long-term investment plans waver
While a majority of investors still plan to hold onto their properties for at least 10 years or indefinitely, this intent has slightly declined from 57% last month to 51%.
This gradual change points to growing considerations among investors to adjust their long-term strategies in response to evolving market conditions.
Buying preferences: New vs. existing properties
Despite general market adjustments, the preference among investors for purchasing existing properties remains dominant, with 74% opting for this route over new constructions.
This preference is influenced by the abundance of newly built townhouses, particularly in regions like Auckland and Christchurch.
Rental market adjustments
Investors are also becoming more cautious with their rental adjustments, with only 52% planning to increase rents, a significant drop from 80% earlier last year.
The planned average rent increase stands at 4.4%, reflecting a cautious approach amidst ongoing economic shifts.
Banking relations and market outlook
The attitude towards banking support has improved, with a net 11% of landlords finding banks more willing to offer finance, contrasting with the previous year’s tighter conditions.
This easing of credit could play a crucial role in sustaining investment activities in the coming months.
Emerging concerns: Rates and costs
Investors are increasingly worried about council rates and insurance costs, with these expenses posing significant concerns due to potential increases influenced by external factors like climate change impacts and global market conditions.
Maintenance costs also remain a high concern, maintaining pressure on property investment returns, the survey found.
