Investors wary of housing, survey shows

Possible tax changes have seen a swing away from confidence in property investment. Photo / Greg Bowker

New Zealanders' confidence in investing in the housing market has plummeted after warnings from the Government about potential tax changes in the May Budget.

A survey by RaboPlus found confidence in property had fallen from a net -16 per cent in August to -47 per cent in February and is now in line with the confidence expressed about investing in the financial sector.

RaboPlus general manager Mike Heath said the results showed a 180-degree swing on property investment.

"People feel no more confident about it than financial sector investments. That just really shows the message has got through loud and clear. People are expecting significant change in the tax regime on May 20."

Heath said while it was a significant change it meant investing in New Zealand would now be more balanced and showed tax had been a key motivator in investing in property.

"People are quite money-rational - that is why a lot of them would have got into property. It was similar to why people got into PIEs (portfolio investment entities)."

Meanwhile, confidence in investing in finance companies has improved. In August confidence was down a net -20 per cent but it has pulled back to -16 per cent. Confidence in banks was also up although credit unions and building societies had fallen slightly.

When it comes to giving advice on financial products it appears the onset of new legislation for the financial advice sector has failed to boost confidence.

Confidence in advisers fell from a net 14 per cent to 13 per cent and people remain the least confident in sharebrokers at a net 3 per cent.

Heath said it was hard to know why brokers were so poorly perceived by the public but it could stem from New Zealanders' fear of the stock market after the 1987 sharemarket crash.

The survey also found Kiwis are more likely to turn to family, friends and even workmates before getting professional financial advice.

One in three surveyed said they had consulted family or friends for advice in the past six months but just 11 per cent had seen a financial adviser.

Surprisingly, of those who had asked for professional advice most preferred to pay by commission, followed by fee for service.

The least preferred option was by a percentage of funds under management.

Heath said the result had been surprising given the scepticism of commissions fuelled by the finance company sector collapse.

But he said people could prefer commissions because they weren't sure what they were paying for when it came to an hourly fee for advice.

At the moment anyone can call themselves an adviser until legislation comes in at the end of the year.