Rental property is still New Zealanders’ top pick for investment returns, the latest ASB survey of investor confidence shows.
But publicity about the sharemarket, generated by the recent float of Mighty River Power and the upcoming sell-off of Meridian shares, has dramatically increased the number of Kiwis who think buying equities offers the best return.
Just 6% thought the sharemarket offered the best prospect of returns in the last quarter of last year. By the end of the first quarter of this year, that had risen to 10%.
The New Zealand sharemarket has had a very strong year in 2012. The NZX50 was up more than 24% last year on the year before.
Rental property was investors’ favourite throughout 2006 and 2007 but dropped below term deposits and bank savings accounts through 2008. Expectations of rental returns recovered a bit during 2009 but dropped below term deposits through 2010, before recovering strongly towards the end of last year.
Just under 20% of investors nationwide now think rental property will offer them the best returns.
In Auckland, 23% of investors back rental property, and 13% would put their money on the sharemarket.
For the rest of the country, there are as many investors who think term deposits offer the best returns as those who would expect the best results from rental property.
ASB’s head of wealth advisory, Jonathan Beale, said investor confidence was now at levels not seen since the end of 2010. It has reached a net 18%.
He said: “Kiwi investors have, over the past few years, regarded the share market with an air of caution in comparison to some other investment classes such as investment property and term deposits. However, it appears that public awareness surrounding recent Government SOE share offers has put the share market firmly back on retail investors’ radar this quarter. While the percentage of respondents believing term deposits and managed investments will yield the best returns is down two points each this quarter, expectations that public shares will have the highest returns has jumped up three points to sit at 10% of respondents.”