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Mixed Expectations

Investors have high hopes for 2020’s property market, but there’s a major headwind at play, so staying informed is critical.

By: Miriam Bell

31 January 2020

Well, what a difference a year can make. It’s a sentiment I seem to be expressing regularly these days – due to the marked improvement in the outlook for the property market. In last month’s issue, our housing forecast canvased the changes and the predictions of the experts, including their view that 2020 could be a brighter one for investors.

But now it turns out that the experts are not alone in their optimism. This month, in our lead article, we feature the results of the annual Squirrel NZ Residential Property Investment Survey, and they reveal quite a turnaround in investors’ perceptions of the market.

Last year’s survey had 27.98% of respondents expecting property prices to increase. In stark contrast, 63.54% of this year’s respondents expect property prices to go up in the next six months. It seems many more investors are planning to buy again this year, with over 40% looking to buy within the next two years.

However, running alongside these more positive expectations of the market itself, the survey also reveals a deep well of discontent about government policy changes. For the second year running, government policy changes are – by far and away – seen as the biggest issue investors face.

But the extreme displeasure felt by most respondents about government changes, and particularly the proposed tenancy law reforms, was most evident in the comments section of the survey.

Make no mistake, the vast majority of investors are very worried about the implications of the reforms for landlords. They see a clear bias towards tenants, which distorts the landlord-tenant relationship and erodes their rights as property owners. Most are also extremely angry about what they see as the unfair anti-investor sentiment displayed by the Government, the mainstream media and sections of the public.

It is this feeling which could, ultimately, impact on the market going forward. While many investors say they will sell up and get out, there is little evidence of this as yet although that may change. What is clear is that landlords do plan to respond to the reforms (if they go ahead as proposed) by getting tougher on tenant selection and by putting rents up.

Opportunities Abound

In the meantime though, it seems investors plan to make the most of the rebounding market and continued low interest rates. In fact, the ongoing supply shortage and some strong drivers in a number of markets should prove attractive to many.

For example, our profile this month, Hamish Duke, is an Auckland CBD expert. He tells us all about the opportunities he sees in this market going forward, given the upcoming America’s Cup. News that Amazon’s mega-production of the Lord of the Rings will be filmed in Auckland only adds to the prospects for this market.

The underlying message? Despite some headwinds, property investment is still a viable option. But it pays to be knowledgeable and prepared. So don’t give up, keep reading and enjoy the offerings in this month’s magazine.

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