Lower confidence in the Auckland property market is weighing on the overall confidence of investors pushing levels to a three-year low, a survey has found.
Investor confidence fell from a net 15 per cent in the June quarter to a net 8 per cent in the September quarter according to research undertaken by ASB.
Chris Tennent-Brown, ASB senior economist, said the dent in confidence could not be attributed to one big thing.
"It's more a case of expectations about the returns on a number of investments slipping over this period."
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The percentage of people who believe the return on their investments will worsen in the next year rose from 13 per cent to 19 per cent.
Those who believed their home in Auckland would provide the best return on investment fell from 15 per cent to 14 per cent.
Those who believed their investment property in Auckland would provide the best return fell from 21 per cent to 19 per cent.
In contrast, confidence in rental properties outside of Auckland picked up, lifting from 12 per cent to 15 per cent.
"I think that outside of Auckland, the combination of lower interest rates, rising rents and house price gains have been buoying confidence," he said.
"We've seen reasonable house price appreciation in a number of areas outside of Auckland over the past year, and I think that's what is helping sentiment."
Tennent-Brown said housing concerns had been showing up in its surveys for a while but there was potential for it to improve in the coming months.
"We now have very low interest rates, the Capital Gains Tax concerns have gone, and the busy period for home sales is upon us. "I think the signals people will get from the market itself over the months before Christmas could really swing perceptions.
"We are expecting a reasonable sales period over the coming month or so, before we head into the quiet holiday period."
There was also a split in confidence in returns between those under 50 and those older. A third of those surveyed under 50 felt returns would be better in the year ahead and just 10 per cent felt it would be worse.
But just 16 per cent of over-50-year-olds felt returns would be better and 30 per cent felt it would be worse.
Tennent-Brown linked the perceptions to the falling rates on term deposits, which have been the main investment for retired New Zealanders for years.
"Kiwis were able to get much higher returns on term deposits 10 years ago, but rates have been falling over the past decade. Now the rates people get are below 3 per cent, which we haven't seen since the 1960s. So it's not surprising this is frustrating savers and denting confidence in the older age brackets of the survey," he said.
The findings were based on 798 online interviews with adults aged 18 years and older throughout New Zealand during the three months to September 30.