Residential Property Investors Still Active In Canterbury’s Market, Says New Research

Residential property investors are taking a long-term
approach to the real estate market, and are adapting to take
advantage of the current economic challenges, according to a
new report out on the sector.

The latest Investor
Insight research report compiled by economist Tony
Alexander identifies that residential property investment
intentions have remained relatively consistent over the past
year – with a growing number of investors moving away from
new build purchases toward buying existing
dwellings.

“Twenty-four percent of existing property
investors responding to the survey have reported that they
are thinking about another property purchase in the coming
year,” says the latest Tony Alexander Investor
Insight report – which is essential niche reading for
those with investment-grade real estate
assets.

“This is virtually unchanged from the
previous two months. Over 65 percent of our respondents
report that they intend holding their property asset for
over 10-years or longer.

There is no trend easing in
this planned holding period measure – despite the weakness
in property prices currently being
observed.

“Investor interest in purchasing a new
townhouse is back on its upward trend. The preference
amongst those thinking about buying an existing property is
strongly in favour of a standalone house.”

The Tony
Alexander research highlights multiple different trends and
patterns across the residential investment property sector,
such as:

• Almost 90 percent of investors with
  mortgages coming up for renewal intend fixing for one or
  two-years
• Increasing interest rates are not driving
  accelerated debt reduction of residential property
  investors
• The peak period of difficulty getting
  finance from banks was between October and February. Things
  have improved since then
• As ever, the biggest
  concerns of residential property investors are the new
  Government regulations favouring tenants and loss of ability
  to deduct interest payments from rental
  income
• Usually there are more people citing selling
  for retirement than for any other reason, and that remains
  the case this month for 37 percent of survey respondents
  Interest rates for bank deposits remain low as an
  alternative investment option The most common rent rise
  being contemplated by landlords is five
  percent.

Interestingly, the second highest
proportion of respondents to the Tony Alexander Investor
Insight survey questionnaire came from Canterbury. As
would be expected, Auckland contributed the highest
percentage of respondents. However, the solid support from
Cantabrians reflects how big a part of the investment scene
residential property is down here – although the activity
flies pretty much below the radar for many in the
public.

In response to the underlying investor buyer
demand for investment stock in Christchurch, Bayleys
Canterbury has compiled an Investment Auction Day – taking
place at the agency’s Riccarton offices on August 4, and
bringing together some 10 residential property opportunities
up for sale.

Properties within the Bayleys Canterbury
Investment Auction Day portfolio range from two-bedroom
flats, through to six-bedroom student rentals, community
leased stand-alone house and an ‘as is, where is’
property. Some of the homes are already tenanted – with
the tenants indicating their intentions to stay on under any
new ownership – while others have been made vacant so new
owners can set their preferred rental rate.

A
proportion of the listings have the opportunity to add value
by reconfiguring layouts or undertaking refurbishments,
while others are in a ‘turn-key’ state ready for new
tenants.

Bayleys Canterbury Residential investment
leader Angela Webb said feedback from within her group’s
buyer and vendor databases replicated the sentiments
evidenced in the Tony Alexander Investor Insight
report.

“Most of our vendors at the upcoming auction
day are taking advantage of the considerable capital growth
which has been achieved on their asset over the lifetime of
ownership, and are now crystalising that gain. Some have
indicated they will use the proceeds to fund international
travel, some are looking at paying of their personal home
mortgages, and others are looking to pay down debt for
retirement,” said Angela Webb.

“On the other side
of the equation, we have a strong network of ‘qualified’
first-time investors and experienced investors saying they
are looking for ‘bricks and mortar’ investment assets in
the city rather than the higher risk options offered by the
share market, or the low rate of return options offered by
bank deposit accounts.

“Owning residential real
estate in Canterbury for investment purposes still remains a
fundamentally sound decision when you look at the figures.
In most cases, the yield will be higher than bank deposit
interest
rates.”

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