Investor confidence is on the rise but it will not be good news for Finance Minister Bill English because it appears the love affair New Zealanders have with property has been reignited.
The ASB investor confidence index, released this morning, shows confidence climbing out of the doldrums as investors flocked to property for the first time in two years.
The index climbed seven points to a net 12% in the three months ending March.
Mr English has tried to convince New Zealanders to save and pay off debt by removing incentives for property investment in previous Budgets.
Labour is maintaining its policy of introducing a capital gains tax when it leads a government.
ASB wealth advisory head Jonathan Beale said the rise in property investments showed a turnaround in investor attitudes from late last year when the December earthquakes in Christchurch and the looming crisis in Europe threatened to topple the local recovery.
For the first time since March 2010, rental property held the top spot as the investment that offered the best returns, he said.
Nineteen percent of investors now believed rental property offered the best returns, rising from 14% in December. Term deposits fell 3% to take second place at 16%.
The third-ranked investment class was "most intriguing", as managed investments and superannuation rose four points to 13% - their highest level in four years, Mr Beale said.
Shares had also been climbing every quarter since September 2010 and were now fourth equal with KiwiSaver at 10%. Bank savings accounts were last at 8%.
"The low interest rate environment seems to be influencing investor perceptions markedly.
"Investor options appear to be moving away from the traditionally lower risk investment options and searching for those with the potential for higher returns," he said.
That was a turnaround from the "flock to caution" seen in the midst of the financial crisis. However, it was unsurprising after the performance of sharemarkets and managed funds as markets improved in the first few months of the year.
