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Current rental yields around New Zealand are looking up

CoreLogic have released their figures concerning growth in New Zealand’s rental market, revealing that rental growth is now outpacing property values.

Interestingly, the results show the highest rental yields can now be found outside the main centres while the 10 lowest yielding suburbs are all located in Auckland.

CoreLogic’s Senior Property Economist, Kelvin Davidson, noted that after a long period where average property values rose quicker than rents, the situation has been reversing a little in recent months.

Since the start of 2018, rents have been outpacing property values, and in the year to February 2019 the rise in New Zealand’s national rents (5.6 per cent) wasn’t far off double the increase in values (3.0 per cent).

“Our analyses of the ten suburbs/towns around the country with the highest gross rental yields revealed that there are some pretty attractive numbers on offer to landlords, such as a yield of 9.0 per cent in Wairoa (Wairoa District) and 8.7 per cent in Appleby (Invercargill City).

“Add in the growth that some of these areas have also seen in property values over the past year and the total returns look even more impressive – typically at least 20 per cent for the areas in this list,” he said.

At the other end of the spectrum, the lowest yielding suburbs are all in Auckland – such as Herne Bay, Orakei, Devonport and Epsom.

“Looking ahead, it wouldn’t be a surprise to see gross rental yields continue to rise in the coming months, as property values remain subdued and rents maintain their normal consistent pace of growth,” Mr Davidson said.

“Given the extra regulations and costs currently being imposed on landlords by the government, a rise in gross yields would clearly be a welcome trend for many investors.”

 

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