Even though we are only into autumn rental prices have been increasing year on year throughout the country. I have taken a snap shot of some of the top performing areas in New Zealand and also those areas that could expect an even bigger return and potential higher yields. Let’s start off with our biggest city:
Even though property prices have slowed since December last year the demand is still high and prices will continue to rise over the rest of the year. The population is estimated to hit 2million by 2031 and you can only expect the two biggest driving factors, low supply and high demand to continue to push the prices one way and that is up.
Rental returns on the other hand have been flat over the 2015 year but there was a $20p/w increase in Dec/Jan as expected during this time of the year. The average rent now is at $500p/w and the growth is around 4.2% per annum. The type of housing that has had the biggest rental growth is the 3-4 bedroom homes due to more people living together because of high property prices. You will continue to see this over the next few years with more and more people living in one house.
Okay, so Whangarei has had its up and downs especially since the GFC but is Whangarei the next Hamilton? Already better roads and infrastructure are being built through to Auckland for quicker and easier travel and of course the weather is warmer with nice beaches for the kids and our tan. Purchasing property has value for money with Aucklanders’ looking to get a cheaper Bach or holiday home rather than paying higher prices in the likes of Matakana, Wellsford and Omaha. I had a quick look on Trademe in the Whangarei area and a beach front house with amazing views, 3 bed, 2 bath, 3 garages, 2000m2 section asking price $549,000.
So let’s look at some stats. Average rents have increased $20p/w year on year with lower end moving a lot faster than higher end properties with strong yields. The population is in excess of 85,000 with the local council having an impressive growth strategy. Plus they have some big employers such as Marsden Point, Fonterra, and the Cement Works. Whangarei is the capital of the far north so definitely has many upsides to it.
So we go from the top down to the lower part of the South Island to Invercargill. This is where yields have been the winner over capital gains. The last property we had on our books had an 8.4% yield plus our representative down there has been inundated with enquires when listing property. Things are changing with South Institute of Technology predicting an extra 5000 students in the next 5 years plus I would expect their population to increase from its current status of 55,000. Of course don’t forget they do have plenty of sunshine hours reaching 1600 per annum.
Moving up the country to Christchurch we have seen a massive drop in rental prices of 6.7%. Rents have been declining for the last 10 months from the peak in early 2015 which was $434p/w down to $390p/w. At the time of the quake average rents dropped to $320p/w. Why this happened, well supply and demand has now balanced out with homes either been repaired or replaced, so rents have dropped back. The rebuild is now focused on the centre of the city which will be mainly commercial buildings. Once this is complete businesses will flourish, money will pour in, kiwis and immigrants will start to flood back to Christchurch for the lifestyle and warmth of the Cantabrians which will help rental prices to increase again.
Our beloved capital Wellington has had a slow but steady increase of 2.2% year on year, with 12.4% increase over the last 5 years in average rent values. The biggest challenge Wellington faces is the shortage of sale and rental listings which is not pushing demand and or prices up. With a population of over 496,000 this could potentially rise. Wages in Wellington are similar to Auckland but with Auckland’s housing crises this may continue to force young professionals to make the trip down. There is a very good corporate environment in Wellington plus with the Beehive making it the political hub. Areas for the best yields are the Hutt and Porirua.
Bay of Plenty
I have left Bay of Plenty until last because it is the leader of the pack. With a whopping 16.2% increase in rent with an average rent a record $395p/w. In Dec/Jan alone prices increased $25. You will notice as well property prices throughout the Bay of Plenty have increased with Auckland investors heading south and retirees cashing up in Auckland and heading to Tauranga which has seen most of the growth. Bay of Plenty will continue to grow throughout the year.
I hope the above has given you some insight to what’s happening across some of the main centres with market rents. Because Inspire Property Management is based across the country we continue to have up-to-date information available via our teams, get in contact with them to help you make an informed decision regarding either coming on board with us or rental appraisals. We look forward to helping you build you future.
Inspire Property Management Director