The government's pre-budget tax announcements have had a dramatic impact on confidence in investing in the housing market, according to the latest RaboPlus Financial Confidence Index. Confidence levels have slumped a massive 31%, from -16% in August/September 2009 to -47% in February/March 2010.
Housing is now viewed with no more confidence than the financial sector as an investment option. Confidence investing in the financial sector however, while still negative, has improved from -56% six months ago to -44%.
"It's clear the government's recent actions are hitting the housing sector hard," says General Manager for RaboPlus, Mike Heath.
"The survey shows confidence in housing has slipped across both genders, all age groups, and particularly among households with higher income and assets," he says.
"This may be the start of a rebalancing in people's attitudes towards investment options. But while housing no longer holds the same appeal, people are still wary of investing in the financial sector. The question is, where are New Zealanders going to put their money and is the financial sector ready to respond?"
Over the next six months, nearly 60% of New Zealanders say they will make a deposit to their cheque or savings accounts, and 27% will invest in a term deposit or on call deposit with their bank. Thirty percent of New Zealanders are likely to invest with a managed fund (including Kiwisaver), while fixed interest bonds will attract eight percent.
"The findings show that banks are set to capture the majority of investments in the short term, confirming what we know about Kiwis being risk averse. This is also supported by security of money still being the highest priority when people are choosing investments, well above the rate of return which was favoured prior to the economic crisis," says Mike Heath.
Confidence levels in the financial sector tracked relatively consistently over the past six months. Banks attracted the biggest shift in public perception, with indicators of confidence in their products, information and integrity increasing by between five and seven percent. Overall, banks and general insurers have the highest public confidence rating.
The survey shows 33% of New Zealanders' investments are worth less now than six months ago, whereas 14% say value has improved. Compared to findings in August, a higher percentage of people are saying that the value of their investments have remained the same - 53% compared to 42% six months ago.
"While confidence levels continue to fluctuate, the survey findings point towards some level of stabilisation in people's personal financial situations," says Mike Heath.
New Zealanders' outlook for the future remains positive, with five percent (net) of people expecting that their financial circumstances will improve over the next six months. However, this is down from 10% (net) last August.
Most optimistic about their financial circumstances are people from Wellington, with 35% expecting an improvement in the next six months.
Most improved confidence levels for investing in the financial sector are people from Dunedin at 15%, up from 0% in August.
Source: Landlords.co.nzcomments powered by Disqus