Source: ASB
- Net investor confidence is now at 10%, up from 1% last quarter, with Auckland up to 16%.
- Perceptions of a home as the best returning investment have dropped to their lowest level since first measured in 2015, with under 30s driving the shift to other investments, particularly the share market with confidence jumping to 21%.
- Global and domestic issues continue to strongly influence the mood, with perceptions divided among different demographics.
Investor confidence in New Zealand has shown an improvement this quarter, despite the fact that Kiwis continue to navigate a landscape marked by global uncertainty, a flat domestic property market, and evolving expectations for returns.
Across the country, investor confidence is highest in Auckland at +16%, while confidence for the rest of New Zealand is up to 7%, including the South Island at 8% and Lower North Island lowest at just 3%.
ASB Senior Economist Chris Tennent-Brown notes “Investor confidence has improved. Markets have recovered since the volatility we had earlier in the year, and that’s impacting sentiment positively now, but the flat housing market and lower term deposit rates continue to weigh on the mood.”
For a second consecutive quarter, global political instability or uncertainty is the top concern for investors, with 90% citing it as a key factor.
There has been a notable decrease in those saying they are ‘very or extremely concerned’, and fewer investors are making or considering adjustments to their portfolios. In fact, 53% of those with concerns are now choosing not to make any changes – an improvement from last quarter.
Chris says “What we’re seeing is that investors are becoming more accustomed to uncertainty. Based on our customers’ behaviour, most are choosing to stay the course and not make changes to their portfolios, even as global headlines continue to shift.”
When it comes to perception of best returns, Kiwi views are evolving. One’s own home continues to be rated the best investment overall, but this sentiment has dropped to 15%, the lowest level since we started measuring it in 2015.
“While property is still on top, it’s with much less conviction than in the past. New Zealanders are still looking for signs of recovery in the housing market, but it’s clear that confidence in this traditional favourite is being challenged.”
Perceptions about housing being the place to generate the most wealth are very low for under 30s, who may still be trying to work out how to get into the property market, a stark but understandable contrast to the over 60 participants, whose wealth may be tied up in property,” explains Chris.
In contrast to the low readings on housing, the under 30s surveyed are clearly focussed on other investments, particularly the share market, where confidence has lifted significantly over the past quarter, jumping to 21% compared to 13% in the previous quarter and making it the area that the predominantly Gen Z generation is most confident in when it comes to returns.
Overall, managed investments have held steady at 14%, just after KiwiSaver, which has now overtaken rental property and term deposits in perceived return. Public shares are also gaining favour, with perceptions increasing to 12%. Other options such as rental property, term deposits, and bank savings accounts remain stable, but are no longer seen as the stand-out choices they once were.
“Looking ahead, the overall message is one of cautious optimism. While confidence has edged up, the underlying drivers of uncertainty, like global events, policy changes, and a sluggish property market, remain. Investors are adapting to a constantly changing global backdrop, and while the mood is more positive than last quarter, it is far from buoyant.” says Chris.
