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CPII Survey August 2017
24 August 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:
- Investors no longer consider capital gains as the biggest opportunity as the Auckland housing market shows signs of ‘cooling off’. Return On Investment is now considered the greatest opportunity (29%) followed by capital gains (23%) and property prices rising (23%)
- Investors are concerned most with the possibility of rising interest rates (37%), the introduction of investor un-friendly laws (37%) and property prices falling (35%)
- The Auckland Rental Property Investment Index has increased, reflecting an increase in investors planning to ‘increase’ the size of their property portfolios, coupled with a corresponding decrease in those planning to divest
Risks & Opportunities
Investors no longer consider capital gains as the biggest opportunity as the Auckland housing market shows signs of ‘cooling off’. Return On Investment is now considered the greatest opportunity. Meanwhile investors are concerned with the implementation of investor unfriendly laws, increasing interest rates and falling property prices.
In this month’s Crockers Property Investment Index (CPII) survey in association with IPSOS, we asked property investors to share with us their thoughts on what the biggest risks and opportunities facing New Zealand property investors are over the next 6 months. Note: Risks and opportunities identified were generally consistent regardless of property portfolio size.
The prospects of higher interest rates, implementation of investor unfriendly laws and falling property prices were the most common concerns among property investors (37%, 37% and 35%, respectively). Concern towards interest rates and property prices has remained relatively stable since October 2015, while implementation of investor unfriendly laws was added this year.
Compared to 2016, concern with methamphetamine contamination has softened (25%, down 11 points). Similarly, ‘property damage caused by tenants’ is less of a concern (19%, down 13 points). ‘Poor rental return on investment’ has continued to fall for the second consecutive year (24%, down 8 points), suggesting that investor confidence is relatively strong.
For relatively few property investors, the prospect of untenanted properties (15%), recession (11%) and the need to devote personal time to managing investment property (9%) are big risks.
Although 37% feel there may be a risk of interest rates increasing over the next 6 months, 29% see the prospect of receiving a good rental return on investment as the biggest opportunity over the same period. However, investors who consider the prospect of capital gains as an opportunity has softened considerably since 2016 (23%, down 26 points).
Similarly, ‘house prices continue to rise’ has softened to 23% (down 26 points). This suggests that property investors are expecting the housing market to ‘cool-off’ after considerable increases in Auckland housing prices over the past five years.
Crockers Property Investment Index
This month the Auckland Rental Property Investment Index has increased, converging to equal the Performance Index. This increase reflects an increase of investors planning to ‘increase’ the size of their property portfolios, coupled with a corresponding decrease in those planning to divest.
The Auckland Rental Property Performance Index has continued to trend upward this month. The is a result of more investors feeling that their investments will perform ‘better’ over the next year, coupled with a decrease in those expecting little change.
This research, undertaken by Ipsos on behalf of Crockers, surveyed members of the Crockers Market Research subscriber’s database during August 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 | email@example.com | 09 623 9515
Jonathan Dodd | Research Director, IPSOS Ltd | firstname.lastname@example.org | 09 538 0500