Is property making a comeback?

Tāmaki Makaurau - Investors are stepping up their asset-buying plans while residential property creeps back into the mix, independent economist Tony Alexander’s latest survey shows.

Each month, Alexander surveys more than 28,000 Kiwis to find out what they’re investing in and how they’re investing in it. He then analyses their responses and reports on how investment preferences are changing over time.

This provides a look into people’s thoughts on different shares, types of property, active vs passive fund management, whether to use an advisor or an app, which countries to invest in, and much more.

The proportion of investors planning to add to their portfolios is at a six-month high, with 75 percent of respondents thinking about investing more in the coming year. That’s up from 71 percent last month and a notable increase on June’s low of 69 percent.

Back in June, wholesale interest rates were climbing as central banks zeroed in on inflation with aggressive monetary tightening. This, combined with broader concerns about a global slowdown, weighed on share market sentiment.

These concerns haven’t totally vanished. However, medium-to-long-term interest rates have eased on growing confidence that inflation, while still very high, will fall away quickly through 2023 and into 2024.

People’s intention to add money to existing or new investments in the coming year. Intentions peaked at 88 percent of respondents in September 2021 before hitting a low of 69 percent in June 2022. In August, intentions rose to 75 percent of respondents.

Interest in buying residential property is at its highest level since the survey began in October 2021. A net 16 percent of respondents plan to purchase property, up from 12 percent last month.

The apparent shift in sentiment could reflect easing fixed mortgage rates, signs of improved access to bank finance, recent house price falls, as well as a shift in political opinion polls.

The opposition party has indicated, if elected, it would change some recently introduced housing-market policies, like the bright line test and the removal of interest expense deductibility.

Despite this, respondents’ future investment plans remain firmly in favour of shares, managed funds and / or exchange-traded funds, with over 80 percent of investors expressing interest in buying these asset classes.

Respondents who are considering investing in managed funds continue to overwhelmingly prefer growth or aggressive styles. Interest in conservative or defensively positioned funds has dropped further from its June high.

The proportion of respondents who intend to invest in shares via a KiwiSaver scheme rather than through a non-Kiwisaver managed fund has climbed to 14 percent which is its highest reading since the survey began last year.

Interest in investing in non-Kiwisaver managed funds has also risen slightly this month. This continues to be the preferred option of the two, but the gap is closing.