High rental yields make property investment easy. If a property has the ability to cover its own expenses with rental income, there’s not much to do except sit back and watch your equity grow.
Unfortunately, the highest yielding properties are often found in remote areas with small populations and economies. This limits the chance of capital gains and introduces a host of other risks to the equation. To help you limit these risks, we’ve unearthed three thriving NZ cities where investment properties show unusually high returns.
The average rent in Wellington has been growing so fast during the 12 months to July that it is now just 5 per cent below Auckland according to Bond data analysed by interest.co.nz. Despite that, the Real Estate Institute of NZ’s data shows that the average property price in Wellington is a $615,000 – that’s $235,000 less than Auckland’s.
If you buy the right property investment in Wellington, it’s likely that you’ll enjoy a high rental yield. In fact, NZ Property Investor recently found that one bedroom apartments in the city centre showed gross yields as high as 9.7 per cent.
Dunedin does not have enough rentals to satisfy demand. This imbalance has caused average rents in the city to skyrocket past $400 for the first time in 26 years. And, while property prices are quickly increasing, they’re still very affordable, with an average of around $450,000.
This means that rental properties in Dunedin are showing impressive gross rental yields of up to 8 per cent – particularly in South Dunedin. For beginner investors with less capital and tighter cashflow, the southern city is hard to beat.
Rotorua is the smallest of the cities we’ve mentioned, but it still has a lot to offer. House prices here are low, averaging at just $430,000 but they won’t be that way for long – in the first 11 months of 2018, the average price shot up by 15.1 per cent.
As of June 2019, the Holdens Bay, Owhata and Ngapuna areas of the city had an average rental yield of 6.5 per cent.
Are you interested in buying your first investment property? Or are you keen to diversify your portfolio and buy outside of Auckland? Get in touch with the team at Money Empire to make sure your finance is sorted first.