Investor confidence has taken a soft blow with rental property investment losing popularity ahead of Thursday's budget, an ASB report says.
The latest Investor Confidence Report shows a net 23 percent of investors are expecting a better return rate over the next year, compared to 30 percent in the December 2009 quarter.
ASB head of investments services Jonathan Beale said the first quarter survey shows rental property investment has "lost its shine".
It dropped from 18 to 17 percent in popularity, as all eyes are on the budget for confirmation on expected changes to tax on property investment, he said.
"Markets are gaining some stability as the doom and gloom of recession recedes. All classes surveyed, with the exception of rental properties, shifted upwards in favourability as offering the best rate of return," he said.
"Investors are now looking at a range of options to get the best returns they can on their capital. They are also more measured in their outlook."
Mr Beale said term deposits jumped a net 4 percent in the survey, possibly reflecting the recent pick up in interest rates as the Reserve Bank prepares to lift the official cash rate in coming months.
Managed investments had 10 percent of investors' confidence, shares 8 percent, and KiwiSaver 6 percent - all creeping upwards as favoured assets.
KiwiSaver has also seen a 2 percent increase in usage at 37 percent - the highest level recorded in the survey.
"More Kiwis than ever have signed up to KiwiSaver scheme to save for their retirement. In the ASB KiwiSaver scheme alone more than 235,000 kiwis have now saved more than $1 billion."
Mr Beale said looking ahead to the second quarter, investors' confidence will likely be shaped by European sovereign debt developments, as well as domestic certainly following the Budget release this week.
