Investor confidence defies gloom - hits 5 year high

Data released this week showed New Zealand's average house value cracked $1 million for the first time in the three months to the end of October. Photo / Getty Images

Seemingly untroubled by Covid restrictions or rising inflation risk, local investor confidence has hit a five-year high, according to a new survey.

The latest ASB Investor Confidence Survey shows net investor confidence – the difference between those that think investment returns will improve versus worsen in the coming year – has lifted from 14 per cent to 25 per cent for the three months to October, matching a peak last seen in at the start of 2017.

Aucklanders were significantly more confident than the rest of the country despite being in extended lockdown during the survey period.

Confidence in Auckland reached a more than seven-year high, lifting from 18 per cent to 31 per cent.

ASB senior economist Chris Tennent-Brown said the results were at odds with the general malaise of lockdown.

"We would have expected this to have more of an impact on confidence, but the results have shown the opposite," he said.

Net 24 per cent of South Islanders thought investment returns would improve in the coming 12 months, compared with 27 per cent of those in the upper North Island, and 23 per cent of those in the lower North Island.

Across the range of investment options, it was "a mixed bag", Tennent-Brown said.

Confidence in bank products had increased slightly, in line with interest rates moving higher for term deposits.

"This is flowing through to confidence in bank savings products," he said.

But despite the expectation of economists, that higher rates will see housing market growth slow or stall, more people expressed confidence in their own home as a driver of investment returns.

That view is reflected in ongoing housing market growth in the past three months.

Quotable Value data released this week showed New Zealand's average house value cracked $1 million for the first time in the three months to the end of October.

The average value increased 5.3 per cent nationally in the three months to the end of October, up from the 3.6 quarterly growth in September.

The national average value of $1,002,153 represented an increase of 27 per cent year on year.

Meanwhile rental property confidence dipped, most noticeably in Auckland where confidence fell from 23 per cent to 15 per cent.

"Of all the investments monitored, a rental property is the most hands-on to manage, which could explain the impact we're currently seeing to Auckland's results," Tennent-Brown said.

But ultimately there didn't appear to be one main driver behind the more upbeat Auckland view, which included higher confidence in KiwiSaver, savings accounts, shares and term deposits.

"The very high levels of confidence we're seeing are encouraging, particularly given the day-to-day frustrations about lockdown.

"We expect that people are focusing on the longer term and, importantly, are more confident that lockdown is not going to have a big impact on their investments," he said.

"Although Covid-19 is having a health and economic impact, personal investments have largely performed well over the last year and investors are telling us they expect this to continue."