CPII Survey October 2018
Each month Crockers Property in partnership with independent market research firm Ipsos, survey Auckland property investors for their comments and thoughts on the Auckland property market. The results of the latest CPII survey (Crockers Property Investment Index) are as follows:
- Residential property remains the most popular investment among Crockers’ clients and contacts (83%). Term deposits (32%) and shares/stocks (30%) are the 2nd and 3rd most popular investments.
- This month we asked respondents what they believed were the safest and riskiest investment types. Using this score a nett safety/risk score was derived, the safest possible investment achieving a possible score of 100% and the riskiest -100%. Term deposits (51%) and commercial property (34%) are viewed as being the safest investments over the past 12 months. Whilst shares/stocks (-58%) and currency (-49%) are perceived as the most ‘risky’ investments over the past 12 months with more people thinking they are risky than safe.
- The top-three investment types that property investors believe the New Zealand government should be encouraging to improve the economy are residential property (60%), shares/stocks (43%), and commercial property (40%).
- The Auckland Rental Property Investment Index has experienced a slight increase this month, as a result of a large increase in those planning to make no change to the size of their investment portfolio.
- The Auckland Rental Property Performance Index has declined this month, as a result of an increase in those who believe the performance of the rental market over the next 12 months will get worse.
Investment Types Held
Property – Safe as Houses?
This month we have asked respondents what type of investments they hold, their perceptions around the riskiness of each of these types of investments, and what investment types the New Zealand government should be encouraging to improve the economy. It is important to recognise that these results are skewed towards residential property given that these questions were asked of respondents in Crockers database, the majority of whom are property investors.
Given the nature of the sample (property investors), it was not surprising to see that residential property was the most common investment type held (83%), although it is recognised elsewhere that a disproportionately high amount of New Zealand’s investment value is placed into residential property compared to similar countries elsewhere. Despite currently low rates, Term deposits have experienced an increase since October 2016 and now are the second most common investment type (32%), whilst shares / stocks are a close third (30%). Compared to October 2016 there has been a substantial decrease in the proportion of investors who hold commercial property as an investment type (down 18 points).
Riskiness of Investment Types
We asked our sample to nominate the three investment types they regard as becoming safer over the last 12 months, and the three that they perceive to have become riskier. Using these two scores we have below derived a nett safeness/riskiness level at which the investments are perceived.
As shown below, shares and currency are much more likely to be regarded as having become riskier over the past 12 months, while term deposits and commercial property are regarded as having become safer. There is a divergence in opinions regarding residential property – some 40% of respondents believe residential property has become riskier, whilst 35% believe it has become safer. This has resulted in a net score of -5%.
Compared to the October 2016 results, there is an increase in the proportion of investors who believe investing in residential property has become riskier over the past 12 months. There is also a consensus that shares / stocks have become less risky in the past 12 months than in 2016, although they are still perceived as the most ‘risky’ investment.
This month we also asked investors which investment options the New Zealand government should be encouraging in order to improve the
economy. Investing in residential property was most commonly cited (60%) – to be expected given that this question was asked of property investors. Shares / stocks were next common (43%), although their popularity has been decreasing in the past four years (6 points down since October 2012).
The proportion of investors who believe commercial property should be encouraged by the government continues to increase (a 13-point increase since October 2012), whilst managed funds have also experienced a spike, increasing 10 points since October 2016.
Crockers Property Investment Index
Auckland Rental Property Performance Index
The Auckland Rental Property Investment Index has increased slightly this month, as more investors decide to sit tight and fewer plan to divest.
Against this backdrop of ‘sit and wait’, the Auckland Rental Property Performance Index has decreased this month, as more believe the performance of the Auckland rental market will get worse.