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Falling returns not a concern

Property investors are not very worried about Auckland’s falling rental returns, new research from Crockers reveals.

Friday, July 4th 2014, 12:00AM

by The Landlord

As part of the latest Crockers Property Investment Index research, investors were asked how their future investing decisions would be affected by the fact that Auckland's rental returns are falling as sales prices increase faster than rents.

Most of the investors had one to three investment properties, and most owned them solely in Auckland.

Almost half said they would not make any change to the type of properties or the location that they chose for future investment. Crockers said that could reflect the fact they were seeking capital gains as well as rental returns.

Another 30% said they would consider more investments outside Auckland, 23% said they might look to different parts of Auckland and 23% said they would consider changing the type of property they invested in.

Of those considering a change in property type, 42% had a preference for standalone houses. That was followed by townhouses (33%), apartments (32%) and properties requiring extensive renovation (15%).

The Crockers data also looked at affordability.

It showed that Auckland’s average rent for a three-bedroom house was 0.3 of the average household income. That was significantly more than Christchurch’s 0.24 and Dunedin’s 0.21.

Auckland and Wellington reported relatively stable rental affordability over recent years, although Auckland’s decreased a little since 2012 while Wellington has become more affordable.

But Christchurch had experienced the sharpest rise in rents in the country. Rents in the city are now more than 135% higher than they were in 2009, compared to incomes. Dunedin's are almost 125%, just ahead of Auckland's growth and Wellington's just over 110% higher.

Auckland’s house sales price ratio – comparing average sales prices to average annual household income – showed prices had reached 6.2 times the average income, well above Christchurch’s 4.4, Wellington’s 4.3 and Dunedin’s 3.4.

Auckland and Christchurch had similar trajectories of price growth – Auckland’s prices are now 140% what they were in 2009, and Christchurch’s are close behind.

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ANZ 5.19 4.15 ▼4.04 4.49
ANZ Special - 3.65 ▼3.54 3.99
ASB Bank 5.20 4.15 4.09 4.39
ASB Bank Special - 3.65 3.59 3.89
BNZ - Classic - 3.65 ▼3.49 3.99
BNZ - Mortgage One 5.90 - - -
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Credit Union Auckland 5.95 - - -
Credit Union Baywide 6.15 4.95 4.95 -
Credit Union North 6.45 - - -
Credit Union South 6.45 - - -
Finance Direct - - - -
First Credit Union 5.85 - - -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
Housing NZ Corp 5.19 ▼4.15 ▼4.09 ▼4.39
HSBC Premier 5.24 3.35 3.35 3.35
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HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.65 3.85 3.95 3.89
Kiwibank 5.80 4.30 4.34 4.74
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - 3.55 3.59 3.99
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.69 4.79 -
Resimac 5.30 4.86 4.14 4.19
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RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - 3.69 3.69 ▼3.89
Sovereign 5.30 4.15 4.29 4.55
Sovereign Special - 3.65 3.75 4.05
The Co-operative Bank - Owner Occ 5.15 3.65 3.59 3.99
The Co-operative Bank - Standard 5.15 4.15 4.09 4.49
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TSB Special 5.29 3.85 3.79 4.05
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Lender Flt 1yr 2yr 3yr
Westpac - Offset 5.34 - - -
Westpac Special - 3.65 ▼3.54 3.99
Median 5.35 4.15 4.09 4.19

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