This latest article by James Weir posted in stuff.co.nz on July 31, 2013 reveals how rental property lost its ranking being an asset to give best returns.
For the first time in nine months, rental property has lost its
ranking as the asset that investors say is most likely to give the best
returns. It now shares honours with term deposits, according to an ASB
Bank survey.
"Rental property or nothing" used to be the catchcry of many
investors, but they are now more open to other forms of investment, such
as shares, according to ASB head of wealth advisory Jonathan Beale.
Overall, investor confidence went south for the winter, the June
quarter survey showed. The confidence index fell 7 points from a net 18
per cent positive in the March quarter to a net 11 per cent in the three
months to June.
That reflected a fall in confidence in April, when investors were worried about events in Cyprus.
The ASB Bank survey shows that, nationwide, rental property dipped
two points, to be favoured by 17 per cent as the asset giving the best
returns.
Term deposits jumped two points to 17 per cent of those surveyed, to share the top spot.
Beale said that change was a reflection of house-price concerns.
"Optimism for returns on rental property may have been affected by
talk of an overheated house market and the Reserve Bank reaching for its
macro-prudential tools."
The prospect of rising interest rates next year was also likely to lower confidence in property, he said.
The survey results reflected investors' views of what would give the
best returns, rather than actual returns from investments.
At best, term deposits would return 4 per cent to 4.5 per cent, Beale said.
Property Investors' Federation president Andrew King said this week
that returns on property had been rising in recent years, and were now
about 7.7 per cent on average across the country, up from 6.5 per cent
in 2007.
Yields peaked at 10.2 per cent in 2002.
But Beale said rental returns might be good if people had bought a few years ago, paid a good price and the rent was high.
If investors were buying now, when prices were high, the returns might not be so good.
Some people were also moving out of investment property because of "hassle factors", such as difficult tenants, he said.
In the past two years there had been a definite shift in investors
willing to look at putting money into New Zealand and Australian shares.
People were now much more open to talking about shares and managed funds, Beale said.
Article Source: http://www.stuff.co.nz/business/money/8983238/Investors-looking-beyond-property
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