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Southland comes up trumps for investors

Investors keen to pick up a good deal should look south as a new REINZ report shows that Southland is, once again, the country’s highest performing region for residential property investors.

Wednesday, June 17th 2020, 10:23AM

by The Landlord

REINZ has just released its latest Capital Gains and Rental Yields Report and it reveals that Southland properties provide investors with the second highest capital gain and the second highest yield in the country.

That combination makes it the strongest performing region for residential investors.

Median prices in Southland went from $287,000 to $350,150 in the three months ending March. That means the region’s capital gains increased by 22.0%, as compared to the same time last year.

At the same time, Southland yields increased 4.8% year-on-year.

The West Coast region was the second-best performer for investors. It had the third highest capital gains in the country (up 17.4% year-on-year), along with the highest annual yield at 6.1%.

Third cab off the ranks was the Manawatu-Wanganui region. It had the highest capital gains in the country (up 23.9% year-on-year) and good annual yields at 4.3%.

REINZ chief executive Bindi Norwell says all regions across the country saw a good lift in capital gains for investors due to strong median prices increases; with all but three regions (Auckland, Canterbury and Nelson) seeing double-digit increases.

“Again, Southland has proved to be the ‘standout’ region in terms of providing investors with good returns,” she says.

“That’s a trend we’ve seen for a number of months now, mostly the result of low property prices and good rental returns across the region.

“Additionally, the West Coast has proved to be positive place for investors over the first quarter of the year with the highest yield in the country.”

At the other end of the scale, the report found that Auckland had the third to lowest capital gains across the country (up 7.5% year-on-year) and the lowest annual yield of all regions (3.2%).

This made it the worst performing region for residential property investors.

Norwell says that Auckland’s property prices peaked at $945,000 in March so it’s not entirely surprising that Auckland fell toward the bottom of the table in terms of both capital gains and yield.

“Even though we’re in a post-Covid environment, there is still a shortage of listings which continues to put pressure on investors from a pricing perspective, particularly when they are often competing with first home buyers for purchases.”

Looking forward, it will be interesting to see what level of impact Covid-19 has for investors, particularly when you take into account the rental increase freeze and some tenants’ inability to pay their rent due to job losses, she says.

“The following few months are likely to be an interesting time for investors. On one hand we’ve got some of the lowest lending rates we’ve ever had, the LVRs have technically been temporarily removed and lending to investors is up 25.7% year-on-year.

“But on the flip side, the country is facing significant levels of rising unemployment and investors are waiting with bated breath to find out whether the 90-day notice will be removed as part of the Residential Tenancies Act changes.”

Tags: Auckland average price capital gains coronavirus Covid-19 house prices housing market investment landlords LVR median price mortgages price growth property investment property management real estate REINZ rental market rental returns yield

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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 3.85
ANZ Special - 2.65 2.75 3.35
ASB Bank 4.45 3.19 3.19 3.49
ASB Bank Special - 2.69 2.69 2.99
Bluestone 4.44 4.44 4.44 4.44
BNZ - Classic - 2.65 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 2.79 2.79 3.39
The Co-operative Bank - Standard 4.40 3.29 3.29 3.89
TSB Bank 5.34 3.59 3.49 3.79
TSB Special 4.54 ▼2.65 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 - ▼2.65 2.69 2.79
Median 4.55 3.22 3.22 3.44

Last updated: 3 July 2020 8:15am

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