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Southland “standout” region for investors

Investors looking for both strong capital gains and good rental yields should head to Southland – if they heed the results of new REINZ research.

Monday, November 11th 2019, 11:53AM

by The Landlord

The Southland region is currently the strongest performing region for residential property investors with the second highest capital gains and second highest yield, according to REINZ’s Capital Gains & Rental Yield Report.

Capital gains in Southland increased by 20.5% for the three months ending August when compared to the same time last year, with median prices going from $245,599 to $296,000.

Additionally, yields increased 5.2% year-on-year making it the standout region in New Zealand.

The Manawatu-Wanganui region also turned in a strong performance from an investment perspective.

It had the highest capital gains seen across the country – up 23.0% year-on-year - and the fourth highest yield at 4.7%.

Another strong performer was Gisborne where capital gains saw a 15.6% year-on-year increase. The region also saw solid annual yields of 4.5%.

Rounding out the top four regions was the Hawkes Bay region which saw its median prices rise by 11.9% year-on-year and annual yields of 4.3%.

REINZ chief executive Bindi Norwell says the majority of the regions were high in one measure and low in the other.

That means Southland’s strong result in both capital gains and yields indicates it was a very good region for investors to have investment property in over the past year.

“Similarly, investors in the Manawatu/Wanganui region are likely to have been quite pleased with how their residential investment properties have performed over the past year.”

In contrast, investors in Auckland saw capital gains fall by 1.5%, but yields increase marginally from 3.2% to 3.4% - due to the continued shortage of rental stock which continues to push up rental prices.

Looking across different parts of the Auckland region, there was a mixed bag of results.

Capital gains were highest in Papakura and North Shore (+5.6% and +2.4% respectively), but yields were up in all areas with the exception of Papakura.

Manukau City saw the largest drop in capital gains (-3.2% annually) and Auckland City had the lowest yield at 3.0%.

But the Auckland region was not alone is seeing a drop in capital gains. The West Coast saw a drop of 11.1% year-on-year while Marlborough gains were down by 2.2%.

Norwell says that historically low lending rates for property investors and the fact that other forms of investment have lower return rates, means residential property looks increasingly positive for investors.

This is particularly the case at the bottom of the South Island and the middle of the North Island – just not in Auckland, she adds.

 

Tags: Auckland average price capital gains house prices housing market interest rates investment landlords Lending mortgages property investment property values real estate REINZ rental returns yield

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Lender Flt 1yr 2yr 3yr
ANZ 5.19 4.05 ▲4.05 4.49
ANZ Special - 3.55 ▲3.55 3.99
ASB Bank 5.20 3.89 4.05 4.39
ASB Bank Special - 3.39 3.55 3.89
BNZ - Classic - 3.49 3.45 3.99
BNZ - Mortgage One 5.90 - - -
BNZ - Rapid Repay 5.35 - - -
BNZ - Std, FlyBuys 5.30 4.45 4.35 4.55
BNZ - TotalMoney 5.30 - - -
China Construction Bank 5.50 4.70 4.80 4.95
China Construction Bank Special - 3.19 3.19 3.19
Lender Flt 1yr 2yr 3yr
Credit Union Auckland 5.95 - - -
Credit Union Baywide ▼5.65 ▼4.75 ▼4.75 -
Credit Union North 6.45 - - -
Credit Union South ▼5.65 4.75 4.75 -
Finance Direct - - - -
First Credit Union 5.85 3.99 4.49 -
Heartland 6.70 7.00 7.25 7.85
Heartland Bank - Online - - - -
Heretaunga Building Society 5.75 4.80 4.95 -
HSBC Premier 5.24 3.54 3.54 3.69
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
Kainga Ora 5.18 4.04 3.95 4.39
Kiwibank ▼5.20 ▲4.20 4.30 4.64
Kiwibank - Capped - - - -
Kiwibank - Offset 5.15 - - -
Kiwibank Special - ▲3.45 3.55 3.89
Liberty 5.69 - - -
Napier Building Society - - - -
Nelson Building Society 5.70 4.25 4.15 -
Pepper Money Near Prime 5.64 - 5.44 5.44
Lender Flt 1yr 2yr 3yr
Pepper Money Prime 5.18 - 4.98 4.98
Pepper Money Specialist 7.59 - 7.39 7.39
Resimac 4.50 4.86 3.89 3.94
RESIMAC Special - - - -
SBS Bank 5.29 4.85 5.05 5.49
SBS Bank Special - ▼3.39 3.45 3.89
Sovereign 5.30 ▼3.89 ▼4.05 ▼4.39
Sovereign Special - ▼3.39 ▼3.55 ▼3.89
The Co-operative Bank - Owner Occ 5.15 3.49 3.59 3.89
The Co-operative Bank - Standard 5.15 3.99 4.09 4.39
TSB Bank 6.09 4.35 4.25 4.69
Lender Flt 1yr 2yr 3yr
TSB Special 5.29 3.55 3.45 3.89
Wairarapa Building Society 5.70 4.85 4.99 -
Westpac 5.34 4.15 4.09 4.49
Westpac - Offset 5.34 - - -
Westpac Special - 3.39 3.45 3.99
Median 5.34 3.99 4.07 4.39

Last updated: 9 December 2019 9:02am

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