CPII Survey November 2017
28 November 2017
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:
- In the wake of recent housing policy announcements by the new Labour Government, we gauged the mood of property investors and found:
- The proportion of investors who are negative about these new policies (34%) outnumbers those positive about these policies (27%).
- 44% expect residential property prices to decline in the next 12 month, up 10 points from June.
- This month the Auckland Rental Property Investment Index has recovered somewhat. This reflects a slight increase in the proportion of investors planning to increase the size of their property portfolio, coupled with a slight decline in the proportion looking to divest.
Labour’s Housing Policy Announcements
This month we gauged the reaction among property investors to the new Labour Government’s recent housing policy announcements. Where applicable, we have compared results to June 2017, about four months prior to the change of Government and before these policies were formally announced.
Awareness of the Housing Policy Announcements
Claimed awareness among property investors was highest for the Healthy Homes Guarantee Bill (31%) and the ban on foreign buyers (27%). Claimed awareness of the remaining four policies stood at about 1 in 5 investors.
Opinion of the New Housing Policies
The proportion of investors who are negative about these new policies (34%) outnumbers those positive about these policies (27%). The larger proportion of investors surveyed are neutral (36%) and these results were broadly consistent between larger and smaller portfolio investors.
Impact on Residential Rental Portfolio Intentions
Most investors (59%) stated that they would make no changes to their property portfolios as a result of these recent policy announcements, down 10 points from June. Meanwhile 17% (up 2 points) said they would reduce their portfolio size and 19% (up 6 points) didn’t know. This suggests that although a growing proportion of property investors may be taking a ‘wait and see’ approach, the majority are still looking to make no changes to their rental property investments. Larger portfolio investors (portfolio valued at $1m or more) were more likely than smaller portfolio investors to reduce the size of their rental property investment, no doubt because even a small percentage decrease in prices can have a large monetary value.
Impact on Residential Property Prices
With these policy announcements in mind, 44% of property investors believe that property prices will decline in the next 12 months, a 10-point increase from June. Meanwhile the proportion of those who believe property prices will stay the same has declined from 42% in June to 32% in November. This suggests that there is a growing sense of pessimism among investors following years of steady house price rises due to the prospect of new residential policies, plans to reduce net migration and the potential for overseas interest rates to rise, which would impact on the availability of credit.
Impact on Rental Property Rents
Keeping these policy announcements in mind, the majority of investors (61%) claimed that they’d increase rents to some extent, although this is lower than in June (68%). Meanwhile the proportion of those who didn’t know whether they’d increase rent rose to 19%, up 12 points from June. There was a slight decline in the proportion not planning to increase rents – down 5 points to 20% in October. This suggests a greater uncertainty among property investors, where more investors have adopted a ‘wait and see’ approach to rent increases in the wake of the new government’s housing policy announcements and plans to reduce net migration.
Larger portfolio investors were more likely to raise rent by 3% or more versus smaller portfolio investors while the latter group were more likely to leave rent unchanged. It is also important to note that this survey was conducted prior to the recent release of the new valuations for Auckland city properties (with the associated expectations of increased rates), which is expected to lead to rises in Auckland rents over coming months.
Crockers Property Investment Index
This month the Auckland Rental Property Investment Index has recovered somewhat. This reflects a slight increase in the proportion of investors planning to increase the size of their property portfolio, coupled with a slight decline in the proportion looking to divest.
The Auckland Rental Property Performance Index has declined, due to an increase in the proportion of investors expecting ‘worse’ returns together with a slight decrease in the proportion of investors expecting ‘better’ returns. The proportion expecting performance to stay ‘the same’ held steady.
This research, undertaken by Ipsos on behalf of Crockers, surveyed members of the Crockers Market Research subscriber’s database during November 2017. Respondents included property owners, residential and commercial landlords, property managers, estate agents and tenants. This is an ongoing series of monthly surveys, delivering a regular barometer of property investors’ confidence in the Auckland market.
For more details, please contact:
Kim Sinclair | Marketing Manager, Crockers Property | firstname.lastname@example.org | 09 623 9515
Jonathan Dodd | Research Director, IPSOS Ltd | email@example.com | 09 538 0500