Investors sit in wait
A recent survey has found the changes announced by the Government in Budget 2010 have had little impact on the confidence of property investors.
The recent quarterly survey by QV, which for the first time included a set of questions specifically for property investors, showed that despite the taxation changes few are planning to sell.
In fact, over half of property investors said they intend to keep their current portfolio and a total of 20% intend to buy investment properties - 12% intend to buy more and 8% are intending to sell then re-buy.
Of the few that said they are intending to sell, most are either going to do so quickly or not for at least six months.
Meanwhile of those planning to buy, few intend to do so within three months, with 31% saying they intend to buy in three to six months, 31% saying it would be in six to 12 months and 29% indicating they intend to wait at least six months.
The survey also found that while 39% of property investors intend to leave rents unchanged over the next six months the majority of landlords (53%) intend increasing rents in that period, mostly by 1% to 5%.
In terms of the changes announced in the Budget, some 35% of the property investors who responded to the survey said they considered the biggest financial impact to be from changes to depreciation rules, 27% cited the GST increase, 24% said lower personal income tax while only 10% said changes to LAQCs and the use of Trusts would have the biggest financial impact.
Frank Newman, a property investor and the author of numerous books on property investment, says the survey confirms investors remain optimistic about the outlook for property investment but most are taking a cautious approach, at least in the short-term.
"Clearly most see little need to buy properties while prices are flat or even falling, preferring to wait knowing that negative cash flow is unlikely to be recovered by rising property values," he says.
"They are instead taking a cautious approach, keeping their funds and credit lines in reserve and waiting to re-enter the market.
"Further, while thinking about increasing rents it seems most do not intend to aggressively pursue this course."
Posted: 30 Jul 2010
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