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Investor confidence bouncing back with high house prices

High housing prices are driving increased investor confidence, according to ASB bank's quarterly Investor Confidence Survey.

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Confidence took a hit as the Covid-19 pandemic first hit, but it appears to be rebounding. Source: 1 NEWS

However, while the survey shows a bounce back in confidence from the previous quarter’s record low, it’s still in negative territory, sitting at -11 per cent.

That figure is an improvement from -25 per cent in the previous survey.

In a statement today, ASB said a stabilising sharemarket and a better than expected housing market was driving the boost.

"Going into lockdown, many pundits and government agencies forecast a material housing market correction to accompany New Zealand’s deepest economic recession in decades," ASB senior economist Chris Tennent-Brown said.

"We were less pessimistic with our prediction of a six per cent fall in prices, but some were suggesting house price declines well into double-digits.

"Fast forward a few months and national house prices have bounced back to fresh record highs. Uncertainty is never good for confidence but as the Covid picture in New Zealand has become clearer, a rising tide of confidence has been reflected in this survey."

But people are worried about the returns offered by KiwiSaver and bank deposits.

Tennent-Brown attributed the mood shift to the swings in members’ balances over the year, with record high KiwiSaver returns last year boosting confidence in the first quarter of the year, and Covid-19 uncertainty and falling fund balances contributing to the decline in the second two quarters.

"It's been a volatile year for sharemarkets, and that’s flowed through to investments like KiwiSaver. But hopefully people have stuck with their long-term strategies and seen a decent recovery in KiwiSaver balances over the past six months."