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Property investors' outlook positive: Survey

It’s a great time to be a property investor, according to the results of the latest and Mike Pero Mortgages survey.

By Susan Edmunds

The results, released yesterday, paint a rosy picture with lending easier, rents rising, vacancy rates low and values improving.

The survey of 753 landlords showed that 27% planned to buy a new investment property within the next 12 months. Ninety-four per cent expected house prices to increase or remain the same. Just 6% expected prices to fall.

Shaun Riley, chief executive of Mike Pero Mortgages, said the survey was a reflection of what he was seeing in the marketplace.  “The conditions are favourable for property investment.”

Rental returns were increasing quite quickly. Riley said that was partly due to a shortage of rental stock. 

As properties became more valuable, people sought more rent for them, too.  “Landlords look at the return – for assets with more value, they want a better return.”

Vacancy rates were also low, with few investors reporting properties empty for more than week.

Riley said he was surprised that only 55 per cent of those surveyed believed rents would continue to increase. “I thought that would be higher. I would have thought all indications are saying that rents are going to push up.” publisher Philip Macalister said the survey showed property investors were operating very sensibly in the current climate. “Contrary to their media portrayal, this shows these guys are quite prudent and making sensible decisions, such as paying off debt.”

The survey showed that 67.3% of investors were using low interest rates to pay off their debt faster, compared to just under 20% who were using cheap lending to buy more properties.

Most were taking a hands-on approach, too. Only a third were using a property manager for their properties.

Some survey respondents said low interest rates meant more homebuyers in the market, which made it harder to buy investment properties.

Almost a quarter of investors had moved their loans on to a fixed rate from floating in the past three months, despite all signs pointing to low interest rates for a while yet.

Riley said low interest rates were making property investment more appealing. “Lending is easier, a general credit easing has made it a bit easier to get a mortgage.”

That’s backed up by the survey results, which show 55.6% of investors said low interest rates were making residential property investment more attractive. More than half the investors surveyed said they did not expect home loan rates to start rising until March 2013 or later.

Macalister said the biggest issue for investors was finding the right property to buy, and that might encourage Auckland’s increased activity to filter out to other regions.

“People struggling to buy in Auckland might start looking in places like Rotorua and Hamilton.”

Riley said that was already happening, especially in Hamilton.

Macalister expected to see more people becoming property investors.

“If you put your money in the bank, you’re not going anywhere after inflation and tax. People are pretty wary of shares. There aren’t a lot of fixed-interest options around. The fundamentals around property would make it appeal to people.”

Tags: shaun riley - philip macalister