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Southland is tops for investors

It seems you can’t just beat Southland for high performing investment properties, with the region coming up trumps yet again in a new REINZ report.

Friday, September 25th 2020, 10:27AM

by The Landlord

Southland remains the strongest performing region overall for residential investors, according to the latest Capital Gains and Rental Yields Report from REINZ.

The region has the second highest capital gains in the country and the second highest yield.

Capital gains in Southland increased by 19.3% for the three months ending June as compared to June last year. That means median prices rose from $285,000 to $340,000.

Additionally, yields in the region – which also came out on top in the last such report - increased by 4.9% year-on-year.

REINZ chief executive Bindi Norwell says that for Southland to continue to provide such positive gains for investors on both a capital gains and yield perspective means that the region is really ticking all the boxes from a strategic investment perspective.

“No doubt, the area will continue to remain on investors’ radar going forward, particularly now that the 40% deposit requirement has been removed with the temporary withdrawal of LVRs and now that some of the major banks are offering investors the same lending terms as owner-occupiers.”

Southland was followed in the rankings by Gisborne and the West Coast (in second equal place), and then Manawatu/Wanganui (in fourth place), and Taranaki (in fifth place).

The Gisborne region has been in the top three regions for five of the last six quarters and its second equal placing this quarter shows it continues to provide strong returns for investors.

It had the fourth highest capital gains in the country (up 16.2% from $370,000 to $430,000) and the third highest yield for New Zealand at 4.6%.

The West Coast region had the sixth highest capital gains in the country (up 12.8% from $195,000 to $220,000) and the highest yield for New Zealand at 6.7%.

At the other end of the scale, Auckland had the third to lowest capital gains across the country (up 7.6% year-on-year) and the lowest annual yield of all regions (3.2%), making it the worst performing region for residential property investors.

The three regions with the biggest increase in capital gains for the three months ending June 2020, as compared to the same period ending June 2019 were Hawke’s Bay (up 19.7%), Southland (up 19.3%), and Manawatu/Wanganui (up 17.3% increase).

At the other end of the scale, Auckland and Canterbury fell towards the bottom of the capital gains ranking in 14th and 16th place respectively.

Norwell says that despite the Covid-19 lockdown in April, all regions across the country saw a solid uplift in capital gains for investors as a result of strong median prices increases.

“The report showed all but three regions (Auckland, Bay of Plenty and Canterbury) with double-digit increases from a capital gains perspective showing how strong the market was despite the global pandemic making its presence felt in Aotearoa.”

There have been a number of factors that have been driving the lift in capital gains over the past few months in these regions, she says.

Those factors include the temporary removal of LVRs, the uplift in demand and the low interest rate environment.

Meanwhile, the three regions returning the biggest to yields to investors for the three months ending June 2020 were West Coast with a yield of 6.7%, Southland with a yield of 4.9%, and Gisborne with a yield of 4.6%.

Norwell says that yields actually fell for most parts of the country from a percentage perspective, but that’s not surprising given the introduction of a six-month rental freeze in March due to Covid-19.

“However, none of the falls were particularly dramatic suggesting that initial fears that yields would be significantly impacted by rising unemployment as a result of COVID-19 have been unfounded.”

The only region in New Zealand that saw a slight increase in yields was Tasman, which saw a slight increase to 3.5% in the three months ending June, from 3.4% in June last year.

“This is most likely because it’s the region that has seen the largest increase in rental prices over the last 12 months,” Norwell adds.

Tags: Auckland capital gains Covid-19 housing market interest rates investment landlords LVR Mortgage Rates mortgages price growth property investment real estate REINZ rental returns rents yield

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Lender Flt 1yr 2yr 3yr
AIA 4.55 2.55 2.69 2.79
ANZ 4.44 3.15 3.25 3.39
ANZ Special - 2.55 2.69 2.79
ASB Bank 4.45 2.55 2.69 2.79
Bluestone 3.49 3.49 3.49 3.49
BNZ - Classic - 2.55 2.69 2.79
BNZ - Mortgage One 5.15 - - -
BNZ - Rapid Repay 4.60 - - -
BNZ - Std, FlyBuys 4.55 3.15 3.29 3.39
BNZ - TotalMoney 4.55 - - -
CFML Loans 4.95 - - -
Lender Flt 1yr 2yr 3yr
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 3.95 3.85 -
Credit Union South 5.65 3.95 3.85 -
First Credit Union Special 5.85 2.95 3.45 -
Heartland 3.95 2.89 2.97 3.39
Heartland Bank - Online 2.95 1.99 2.35 2.45
Heretaunga Building Society 4.99 3.50 3.40 -
HSBC Premier 4.49 2.45 2.60 2.65
HSBC Premier LVR > 80% - - - -
Lender Flt 1yr 2yr 3yr
HSBC Special - - - -
ICBC 3.69 2.45 2.65 2.79
Kainga Ora 4.43 2.93 3.07 3.24
Kainga Ora - First Home Buyer Special - 2.25 - -
Kiwibank 3.40 3.30 3.54 3.54
Kiwibank - Offset 3.40 - - -
Kiwibank Special 3.40 2.55 2.79 2.79
Liberty 5.69 - - -
Nelson Building Society 4.95 3.45 3.49 -
Pepper Essential 4.79 - - -
Resimac 3.39 3.35 2.99 3.35
Lender Flt 1yr 2yr 3yr
SBS Bank 4.54 3.05 2.99 2.99
SBS Bank Special - 2.55 2.49 2.49
The Co-operative Bank - First Home Special - - - -
The Co-operative Bank - Owner Occ 4.40 2.55 2.69 2.79
The Co-operative Bank - Standard 4.40 3.05 3.19 3.29
TSB Bank 5.34 3.29 3.45 3.59
TSB Special 4.54 2.49 2.65 2.79
Wairarapa Building Society 4.99 3.55 3.49 -
Westpac 4.59 ▼3.09 3.29 3.39
Westpac - Offset 4.59 - - -
Westpac Special - ▼2.49 2.69 2.79
Median 4.55 2.94 2.99 2.80

Last updated: 23 October 2020 5:00am

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