Residential property investors still active in Canterbury market, new research finds
Residential real estate investors are taking a long-term view of the real estate market and adapting to take advantage of current economic challenges, according to a new report published on the sector.
The last Investor Overview research report compiled by economist Tony Alexander identifies that investment intentions in residential real estate have remained relatively constant over the past year – with an increasing number of investors abandoning purchases of new constructions to buy properties existing dwellings.
“Twenty-four percent of existing real estate investors who responded to the survey said they were considering buying another property in the coming year,” says the latest Tony Alexander. Investor Overview report – which is essential niche reading for those with premium real estate assets.
“This is virtually unchanged from the previous two months. Over 65% of our respondents say they intend to keep their property for more than 10 years or more.
There is no trend towards easing this measure of planned holding time – despite the weakness in real estate prices currently observed.
“Investor interest in buying a new townhouse is back on its upward trend. The preference among those considering buying an existing property is strongly in favor of a detached house.
Tony Alexander’s research highlights several different trends and patterns in the residential investment property industry, such as:
- Nearly 90% of investors with mortgages due for renewal intend to repair them for one or two years
- Rising interest rates do not lead to accelerated debt reduction for residential real estate investors
- The peak period of difficulties in obtaining financing from banks was between October and February. Things have improved since
- As always, the biggest concerns for residential real estate investors are new government regulations favoring tenants and the loss of the 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% of survey respondents. Interest rates for bank deposits remain low as an alternative investment option. The most common rent increase considered by landlords is five percent.
Interestingly, the second highest proportion of respondents to the Tony Alexander Investor Overview survey questionnaire came from Canterbury. As expected, Auckland provided the highest percentage of respondents. However, the strong support from Cantabria reflects the importance of the residential property investment scene here – although the activity is flying pretty much below the radar for many members of the public.
In response to underlying investor demand for investment shares in Christchurch, Bayleys Canterbury has compiled an investment auction day – which will take place at the agency’s offices in Riccarton on August 4 and will feature a ten residential property opportunities for sale.
Properties in Bayleys Canterbury Investment Auction Day’s portfolio range from two-bedroom apartments to six-bedroom student rentals, self-contained community rented homes and ‘as is, where are’ properties. Some of the homes are already rented – with tenants indicating their intention to remain under any new ownership – while others have been made vacant so the new owners can set their preferred rental rate.
Some of the listings have the potential to add value by reconfiguring fixtures or undertaking renovations, while others are in a ‘turnkey’ condition ready for new tenants.
Angela Webb, residential investment leader at Bayleys Canterbury, said comments from her group’s buyer and seller databases mirrored the sentiments highlighted in the Tony Alexander Investor Insight report.
“Most of our sellers on the next auction day are taking advantage of the tremendous capital growth that has been achieved on their asset over the life of their property, and are now crystallizing that gain. they will use the proceeds to fund international travel, some are planning to pay off their personal mortgage, and others are looking to pay off debt for their retirement,” said Angela Webb.
“On the other side of the equation, we have a strong network of new ‘qualified’ investors and experienced investors who say they are looking for ‘bricks and mortar’ investment assets in the city rather than the higher-risk options offered by the stock market, or the lower-return options offered by bank deposit accounts.
“Owning residential property in Canterbury for investment purposes remains a fundamentally sound decision given the numbers. In most cases, the return will be higher than bank deposit interest rates.”
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