CPII Survey January 2019
Crockers Property management have announced the latest results of the monthly survey of Auckland property investors it conducts in partnership with independent market research firm Ipsos.
- We asked 170 Auckland residential property investors about the proposed ‘Ring-Fencing law’ which proposes ring-fencing tax losses for rental properties, meaning that investors who run a property at a loss will not be able to claim that against their other income.
- The proposed ring-fencing law has drawn investors’ attention as 72% are aware of this proposed law and 44% of these ‘aware’ investors feel this will adversely impact them in terms of costs or reduced returns.
- Some 34% of investors aware of the proposed law change said that their likely reaction would be to increase rents to offset losses. In addition, 7% said that they would reduce property maintenance.
- 24% of investors aware of the proposed law said that they would be more likely to sell their properties with a year of the law coming into effect.
- Both the Auckland Rental Property Investment Index and the Auckland Rental Property Performance Index changed little this month, moving by only 3 and 2 points respectively. No doubt this reflects the slowing nature of the Auckland housing market at present.
- Interest in ‘CBD apartments’ has picked up after witnessing after a sharp drop in Jan ‘19.
This month we have asked investors about the proposed ring-fencing law in terms of awareness, implications – i.e. financial impact, and options of dealing with the situation. Awareness & Financial Impact Some 72% are aware of the proposed ring-fencing law. The majority (56%) believe it will not have a financial impact on them, while 44% feel this will adversely impact them in terms of costs or reduced returns.
Options Likely to Be Considered
Though 40% of the investors aren’t likely to take action, 34% indicate increasing rents to offset losses. Smaller proportions of investors are looking at options like reviewing / changing the investment structure (18%), reducing the size of property portfolio (13%), or reducing property overheads like maintenance, etc. (7%).
Likelihood of Selling the Property
If the new law changes were to come into effect tomorrow, 24% would be more likely to sell their property whereas for 70% this wouldn’t impact their selling decision. This indicates that the ring-fencing law would have some impact on property owners’ selling decisions.
Crockers Property Investment Index
Auckland Rental Property Performance Index
Both the Auckland Rental Property Investment Index and the Auckland Rental Property Performance Index changed little this month, moving by only 3 and 2 points respectively. No doubt this reflects the slowing nature of the Auckland housing market at present.