"Hopefully people will set goals carefully with an adviser to get used to some of these events" – ASB
Investor confidence has fallen to its lowest since Q3 2020 off the back of a challenging six months. ASB says that last week’s gloomy economic data won’t have done anything to raise spirits, though some areas of the country are more upbeat than others.
For property investors and homeowners, ASB senior wealth economist Christ Tennent-Brown (pictured right) says now is a vital time to sit down with an adviser and work out a long-term strategy.
ASB’s latest Investor Confidence Survey showed confidence sitting at net 1% for Q2 2025 – though still higher than Q2 2020 lows of -25%. Lower North Islanders were the least optimistic, while Aucklanders were the most upbeat.
Tennent-Brown said this is likely because Auckland is more sensitive to any signs of green shoots in the housing market.
“Although that’s been going sideways, when we specifically look at our Housing Confidence Survey, Aucklanders were a bit more optimistic that now is a good time to buy,” he told NZ Adviser.
“There also seems to be a parallel in consumer confidence in Auckland versus Wellington, where Aucklanders were a bit more upbeat in general. It’s not like Auckland is predicting that anything is going back to the races, but there is more confidence there than elsewhere.”
More stable asset classes may gain favour
Of those surveyed, 51% were “very concerned” about the effect of global political instability and uncertainty. Half of those with concerns had either considered making, or already made, changes to their investments as a result.
When asked about planned actions, 35% were planning to educate themselves more about financial markets. Twenty-seven per cent were planning to diversity their portfolios to reduce perceived risk, and the same number were planning to seek advice from an adviser.
Twenty-two per cent were planning to shift towards perceived “less risky” investments. Tennent-Brown said that despite this, a lot of investors are willing to ride it out, as we’ve already seen substantial dips and recoveries throughout the course of the year.
“A lot of people have stayed put and enjoyed a good recovery,” Tennent-Brown said.
“Property is always going to be popular, and it usually comes in at number one for what people see as their major investment.
“From a property investment perspective, the thing that’s weighing on the mood is just how flat the market has been. It’s been taking a bit longer than anyone would have rightfully expected to see any sort of pickup with these lower mortgage rates. It feels like it’s a bit of a slow burn.”
April was a particularly difficult month this year, but the recovery was equally strong. Tennent-Brown said this experience has prompted more investors to hold off widespread switching for now, but notes the latest figures have definitely “made a lot of people question things.”
Where to from here?
For advisers, now is a great time to start checking in with clients to see where their mind is at.
ASB’s survey found that those under 39 years old were the most confident, while the over-60s were the least optimistic. Tennent-Brown notes this may be a reflection of where different age demographics hold their assets. With this in mind, a well-informed long term plan is a good step.
“Hopefully people will set goals carefully with an adviser to get used to some of these events,” Tennent-Brown said.
“As we see, they rattle confidence – but low confidence doesn’t necessarily correspond with low investment returns, as we’ve seen this year. Guidance, advice and sticking to long-term goals is going to be really important.”
Looking ahead, everyone will be watching the Reserve Bank’s October OCR decision. Most banks have already adjusted their forecasts downwards, and there seems little doubt that we’ll see a cut – it’s just a question of how much.
“We’ll certainly be very interested in how low the OCR goes, particularly with last week’s weak economic data in mind, and how quickly that translates into the pickup that we’d expect,” Tennent-Brown said.
“When people are worried, they can often just do nothing. If they’re a property investor or homeowner, waiting on the sidelines can be quite expensive. So I think now is a really good time for people to be thinking about their investment strategy.”
