Investors bullish on property despite flat market

Fluctuating fortunes in the housing market are luring serious landlords to go bargain-hunting so they can increase their portfolio size, says a survey published today.

The second annual survey carried out by BankDirect - ASB's online banking arm - with magazine Kiwi Property Investor quizzed 700 landlords about their investment strategies. It found most dedicated investors were the most bullish about the prospects of getting a good deal.

A third of hardcore investors - defined as those who own or intend to own five or more properties - thought now was a good time to buy.

Less serious investors, who own only one house or flat, were less enthusiastic about the market.

The more properties an investor owned, the more likely they were to employ a professional property manager, the survey found, with 29 per cent of landlords who owned one or two properties employing managers. Equity in their own home was the most popular method of funding the first property purchase.

Anthony Byett, ASB's chief economist, said hardcore investors were the most positive about the housing market.

"This bullish mood may be driven by perceived opportunities in a slowing market or a confidence in their own strategies," Byett said. "Whatever their reason, these hardcore investors are in the mood to invest - over two-thirds stated intentions to buy within the next 12 months."

Jim Anderson, head of BankDirect, said that while the housing market might be flattening, there was still an appetite for further investment.

"The message from this survey is that rental property investment is a business that carries on in the good and not-so-good times," he said.

Andrew King, president of the Auckland Property Investors Association, said the latest banking survey backed up a study his organisation had done last year.

"Of those Auckland investors surveyed then, 87 per cent planned to purchase a property over the next year," King said. "They had an average $741,000 in equity which was 44 per cent of their rental property value so were extremely well placed to make purchases."

On average the investors owned 4.8 rental properties and had been investing for an average 7.8 years, according to the Auckland association survey.

Through hearing from expert speakers and the networking opportunities of the association, members had learned the value of counter-cyclical investing, King said.

"They also realise that the market has changed and learnt techniques for adding value and improving rental returns which is essential," he said.

ANATOMY OF A LANDLORD

The survey found these common characteristics of residential property investors:

* Most often a couple, aged 31-40.

* Joint income $76,000+.

* First bought a house, not a flat or section.

* Bought first property at 21-29 years.


* The New Zealand Property Investors Federation last week appointed Martin Evans of Christchurch its new national president.

Aucklander Andrew King was appointed vice-president. The federation has 18 membership associations which represent 4500 landlords.