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Upswing in Auckland rental yields

Good news for Auckland landlords as a new Barfoot & Thompson report shows the city’s average rental yield has risen for the first time in three years.

Tuesday, August 8th 2017, 12:00AM

by The Landlord

Gross rental yields for three bedroom houses in over half of Auckland’s suburbs rose in the first half of 2017 as compared to the same period last year, according to the agency’s quarterly rental update.

The average rent for three bedroom house was $537 a week as at July 1, which equates to $27,924 a year, while the average sale price was $917,415.

This gives an average gross yield of 3.04%.

Barfoot & Thompson director Kiri Barfoot said that is only slightly up on 2016 – when there was a gross yield of 3.0% over the same period.

But it does arrest the steady decline in rental yields seen since 2014 when the city-wide average was 3.7% and was good news for rental property owners, she said.

“A change in direction of rental yields is exactly what you would expect to happen at some point in response to moderate, but consistent increases in rent, and slowing of house sales prices.”

Rental yields rose in roughly half of Auckland’s suburbs in the first half of 2017, as compared to the same period in 2016.

Barfoot said the upward trend was most obvious in the central suburbs – which include most of the old Auckland City suburbs west of the Southern Motorway – as well as on the North Shore.

Auckland Central itself recorded one of the best yields in the city, at 4.28% (up from 3.94%).

Other top central suburb performers were Ponsonby (up to 3.19% from 2.27%), Grey Lynn (up to 3.05% from 2.58%) and Onehunga (up to 3.15% from 3.03%).

On the North Shore, top performers were Rothesay Bay (up to 3.79% from 2.94%) and Albany (up to 3.38% from 3.11%).

“It was more of a mixed bag in Auckland’s south and west, where around half the suburbs rose, but yields for most still remained better than the city-wide average,” Barfoot said.

All but two West Auckland suburbs had yields above the city average, but Royal Heights (up to 3.88% from 3.61%) and Te Atatu Peninsula (up to 3.06% from 2.78%) were the top performers.

In South Auckland, yields improved in just five of the 14 suburbs surveyed, but yields remained better than average in all but one.

The top performers were both suburbs which had been trending downwards since 2014. They were Otara and Clendon Park which had gross yields of 4.38% and 4.38% respectively.

Meanwhile, the data also showed that average in rents in Auckland have continued along a steady upwards trend.

Across the city, the average rent increased by 4.9% in the April to June quarter of 2017, compared with the same quarter the year before.

The average weekly rent across all property types and locations was $531, up from $506.

Barfoot said that rent isn’t as closely tied to property sales prices as people might expect.

“It is more closely aligned to people’s income and the landlord’s overheads for the property. Rent increases remain fairly consistent at or around 5%.”

Read more:

Rents a mixed bag across New Zealand 

« TOP tenancy policy ignores rental realitiesDark clouds on landlords’ horizon? »

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Lender Flt 1yr 2yr 3yr
AIA 4.55 3.19 3.19 3.49
AIA Special - 2.69 2.69 2.99
ANZ 4.44 3.15 3.25 ▼3.39
ANZ Special - ▼2.55 ▼2.69 ▼2.79
ASB Bank 4.45 3.19 3.19 3.49
ASB Bank Special - 2.69 2.69 2.99
Bluestone ▼3.49 ▼3.49 ▼3.49 ▼3.49
BNZ - Classic - ▼2.55 2.69 2.99
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.25 3.29 3.59
Lender Flt 1yr 2yr 3yr
BNZ - TotalMoney 4.55 - - -
China Construction Bank 4.49 4.70 4.80 4.95
China Construction Bank Special - 2.65 2.65 2.80
Credit Union Auckland 5.45 - - -
Credit Union Baywide 5.65 4.75 4.75 -
Credit Union South 5.65 4.75 4.75 -
First Credit Union Special 5.85 3.35 3.85 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online - - - -
Heretaunga Building Society 4.99 4.35 4.45 -
HSBC Premier 4.49 2.60 2.65 2.80
Lender Flt 1yr 2yr 3yr
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 3.99 2.58 2.68 2.79
Kainga Ora 4.43 3.29 3.39 3.85
Kiwibank 3.40 3.40 3.54 4.00
Kiwibank - Capped - - - -
Kiwibank - Offset - - - -
Kiwibank Special 3.40 2.65 2.79 3.25
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Lender Flt 1yr 2yr 3yr
Resimac 3.49 3.45 3.39 3.69
SBS Bank 4.54 3.29 3.19 3.49
SBS Bank Special - 2.79 2.69 2.99
The Co-operative Bank - Owner Occ 4.40 ▼2.69 ▼2.75 ▼2.99
The Co-operative Bank - Standard 4.40 ▼3.19 ▼3.25 ▼3.49
TSB Bank 5.34 ▼3.35 3.49 3.79
TSB Special 4.54 ▼2.55 2.69 2.99
Wairarapa Building Society 4.99 3.75 3.99 -
Westpac 4.59 4.15 4.09 4.49
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.55 2.69 2.79
Median 4.55 3.19 3.22 3.39

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