Rents lag property values in Auckland, but in Wellington and Christchurch the reverse was true

Rents lag property values in Auckland, but in Wellington and Christchurch the reverse was true

Auckland property values rose more than three times as quickly as rents in the year to July, while in Wellington and Christchurch the reverse was true, with rent increases outpacing property values, according to the Ministry of Business, Innovation and Employment's (MBIE) Housing and Construction Quarterly report.

In Auckland, the average rent from new tenancies reported to MBIE during the three months to the end of July was $456 a week, up 3.6% compared with the same period last year.

Over the same period of time the average value of homes in Auckland increased by 11.6% to $720,426.

In Christchurch the average value of a home was $461,176 in the three months to July, an increase of  6.6% compared with the same period last year.

But the average rent increased by 7.3% to $419 a week over the same period.

In Wellington the market was much more subdued, with property values and rents posting only small gains.

The average property value in Wellington was $451,154 in the three months to July, up just 1.2% on the previous year.

The average rent in Wellington was $366 a week, up 1.8% a year.

The results suggest buying residential property became a slightly more attractive proposition for investors in Wellington and Christchurch over the year, because the rental yields would have become more attractive on properties. 

But in Auckland landlords would likely have had to settle for lower rental yields, although they'd have been compensated with increased capital growth.

The dominance of property activity by the Auckland region meant that nationally, rising property values surpassed increases in rents, with the national average home value rising 7.6% to $479.913 while the national average rent increased by 4.1% to $370 a week.

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6 Comments

It would be insane for a property investor to buy in Auckland at the moment.
Complete madness!!!

Quite honestly , I dont think many investors are buying property in Auckland unless they:- 
1) Have huge deposits and dont over-gear ( Banks are still looking at incomes before lending )
2) Are buying wrecks at bargain basement prices for doing up
3) Are crazy

Just shows how short sighted some people are.
Properties I bought 5-10 years  ago are showing 15-20% yields as well as doubling in value.
If you are prepared to invest for the future and not for the moment, you will do very well as history has proven.
Timing and patience are of the essence.

I suspect the 15-20% Yield is based on his purchase price from 5-10 years ago.
The point is the early years are tough but as your debt reduces and rents increase with time good properties should turn cashflow positive and pay for themsleves.

Hangon, you were quoted in the paper only a few months ago saying you only held commercial property nowdays.  So what properties are these?

"these days he has "about 40" tenants some residential, but mostly commercial"
'everything i own today i bought a very long time ago'
So i guess he is talking cost-yield and not current yield.
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