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Australasian Property Investment  Australian Property Bubble  Real Estate Investor Confidence 

By - Wednesday 25 August 2010

There has been a huge fall in investor confidence in New Zealand, new figures would suggest. According to the annual Nielsen Real Estate Market Report, the number of investors based in the country looking to pour money into real estate has fallen for the first time in years.

During 2009 the report claimed that one in four people said that they intended to buy property as a future investment, but this year's study shows that this number has fallen to one in seven. The news represents the lowest level of interest in property since the survey began four years ago and shows that investor sentiment in the country is changing, with more people looking to hold onto their existing portfolios rather than sell.

It follows the recent residential price index for the country from state-owned valuer QV which said that property values in New Zealand are still rising, but at a slower rate with some experts predicting that they will fall around four per cent in the next 12 months. There is now a very clear intention among investors who own property to hold rather than sell, which is a clear indicator of why the property market in general has slowed significantly.

Alistair Helm, chief executive officer of Realestate.co.nz, explained that the survey was representative of the caution which surrounds the property market. "There is likelihood that those investors still looking to find value will target private sellers who they perceive to offer better deals in this type of 'buyer's market'." Statistics show that there has been a 24 per cent increase of intention by property investors to seek out private sellers.

The challenging market conditions and general uncertainty are factors that have been circling the industry for a while

Tony Boyte, research director for the Nielsen Company's Online Division says: "The property boom made it easier for people to predict the market trends. Recent events seem to have muddied the waters over how much, up or down, price has moved."

Oz Hot Property

Meanwhile, it is not just in New Zealand where there is an air of caution surrounding the market. The Australasian market as a whole has been experiencing a tough time of late, with fears of a property bubble in Australia also voiced recently. With the Australian Bureau of Statistics claiming that prices in major cities have soared by almost 20 per cent within the past 12 months the concerns can be justified.

In Melbourne house prices increased more than 24 per cent in the last year while in Sydney they rose 21 percent, according to the figures. Canberra saw a 19.6 per cent price increase, Darwin 14.6 per cent, Perth 13 per cent, Adelaide 11.l6 per cent, Hobart 10.8 per cent and Brisbane 8.5 per cent.

Rob Henderson, head of Australian economics at National Australia Bank said that the Reserve Bank of Australia needed to get more aggressive and acknowledge the need for a restrictive policy stance. "This is a shocker. The RBA needs to up their rhetoric and acknowledge that the economy is now growing at above average rates, requiring above average interest rates," he added.

It comes as analysts warn that Australia is facing a housing crisis and that the national shortfall of 190,000 dwellings will widen to 466,000 by 2020, amid expectations of a rapidly growing population.

Overseas Property Investment

Further to this, calls have been made for the government in the country to impose a limit on the amount of property which can be sold to overseas buyers. Foreign real estate investors bought $14.9 billion worth of houses and land in Australia last year.

They show that the government issued 4827 real estate approvals to foreign investors last year for commercial and residential properties. About half the approvals were for temporary residents wanting to buy a house as their principal residence. A further 988 approvals were granted to investors to buy vacant land for residential subdivision or to build a houses, with Victoria the most popular state for purchasers.

The Australian government has now announced it will adopt a more stringent approval process so that fewer foreigners will be able to buy and acknowledging that they had pushed up residential real estate prices. According to the new rules, foreign buyers will have to sell when they leave the country and those who ignore the new rules face hefty fines.

"In one sense, little has changed. Foreign residents can still purchase Australian properties and, in particular, people in Australia on temporary residence visas can still purchase existing dwellings," explained Immigration-law specialist David Stratton. In 2007/08, the main foreign buyers were from the US, Britain and the United Arab Emirates. The following year, Singapore investors topped the list, followed by the US and UK.ADNFCR-3415-ID-800035986-ADNFCR

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*This page is provided for information purposes only and should not be construed as offering advice. IPIN is not licensed to give financial advice and all information provided by IPIN regarding real estate should never be treated as specific advice or regulations. This is standard practice with property investment companies as the purchase of property as an investment is not regulated by the UK or other Financial Services Authorities.


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