Auckland's residential rental property market may be at a turning point with indicative rental yields rising in half of the Auckland suburbs monitored by Interest.co.nz's Rental Yield Indicator.
The indicator monitors the theoretical gross rental yields that investors would receive in 56 locations throughout the country where there is a high level of rental activity, based on the REINZ's lower quartile selling prices and the median rents for newly let three bedroom houses recorded by Tenancy Services over the preceding six months.
Of the 10 Auckland suburbs monitored, the yields rose in five of them in the December quarter as median rents rose while lower quartile selling prices started flattening out.
Of the remaining five suburbs, the yields were unchanged in three and declined in two.
Although the change in indicative yields between the September and December quarters was small, it was significant because up until September the indicative yields in Auckland had been declining as the continuing rise in lower quartile prices outpaced the growth in rents, pushing yields down.
The latest figures suggest the rental market in Auckland may be starting to return to fundamentals, where rental growth becomes more important to investors than capital gains.
However even with the latest improvement in yields, they remain at astonishingly low levels, with indicative yields in the Auckland areas monitored ranging from 3.5% at Highland Park in Manukau to 4.4% in Papakura and Franklin.
Outside of Auckland capital gain continues to be the name of the game, with yields continuing to fall in most areas as lower quartile prices rise faster than rents, pushing yields down further.
Some of the biggest falls occurred in the Lower North Island from Palmerston North to Wellington, suggesting continuing strong demand from investors for rental properties in those areas which is likely still pushing up lower quartile prices faster than rents.
Indicative yields are also continuing to fall in the Christchurch suburbs that are monitored.
Around the country the highest indicative yield (based on property sales and new lettings in the six months to December) was a tie between the Holdens Bay/Owhata/Ngapuna areas of Rotorua, and Whanganui, with both achieving 9.7%, while the lowest was Highland Park in Auckland on 3.5%.
Indicative rental yields provide a standardised comparison of the relative gross returns that could be achieved by buying typical rental properties in different parts of the country, before allowing for costs such as mortgage interest, rates, insurance and maintenance, which will vary from property to property and according to each investor's circumstances.
The table below shows the indicative yields for all 61 areas monitored by the Rental Yield Indicator from the September quarter of 2014 to the December quarter of 2016.
 Indicative gross rental yields for three bedroom houses in 56 selected areas with high rental activity. Based on REINZ lower quartile selling prices and MBIE median rents in each area over the previous six months. |
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| Town/region | Yield % Dec-16 | Yield % Sep-16 | Yield % Jun-16 | Yield % Mar 16 | Yield % Dec-15 |
Yield %
Sep-15
|
Yield %
Jun-15
|
Yield %
Mar-15
|
Yield %
Dec-14
|
Sep-14
|
| Whangarei: | ||||||||||
| Kamo/Tikipunga/Kensington | 5.4 | 5.9 | 6.1 | 6.0 | 5.6 | 7.1 | 6.5 | 6.9 | 7.6 |
6.4
|
|
|
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| Rodney - Orewa/Whangaparaoa | 3.8 | 3.9 | 4.1 | 4.1 | 4.1 | 4.3 | 4.5 | 4.5 | 4.6 |
4.8
|
|
|
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| North Shore: |
|
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| Beachhaven/Birkdale | 3.7 | 3.7 | 3.7 | 3.9 | 3.8 | 3.9 | 4.0 | 4.3 | 4.3 |
4.6
|
| Torbay | 3.6 | 3.4 | 3.6 | 3.8 | 3.6 | 3.8 | 4.0 | 4.5 | 4.6 |
4.5
|
|
|
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| Waitakere: |
|
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| Glen Eden | 3.8 | 3.7 | 3.9 | 4.0 | 4.0 | 4.1 | 4.3 | 4.6 | 4.9 |
5.1
|
| Massey/Royal Heights | 3.9 | 3.8 | 4.1 | 4.1 | 4.0 | 4.1 | 4.4 | 4.6 | 4.9 |
5.1
|
| Henderson | 3.8 | 3.8 | 3.8 | 4.1 | 4.1 | 4.1 | 4.4 | 4.7 | 4.9 |
5.0
|
|
|
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| Central Auckland: |
|
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| Avondale | 3.6 | 3.7 | 3.6 | 3.7 | 3.7 | 3.9 | 4.1 | 4.2 | 4.4 |
4.5
|
|
|
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| Manukau: |
|
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| Highland Park | 3.5 | 3.4 | 3.3 | 3.3 | 3.6 | 3.6 | 3.8 | 3.8 | 4.1 |
4.3
|
| Papakura/Drury/Karaka | 4.4 | 4.4 | 4.7 | 4.8 | 4.8 | 4.9 | 5.5 | 5.6 | 5.9 |
6.0
|
| Franklin - Pukekohe/Tuakau | 4.4 | 4.3 | 4.5 | 4.9 | 5.0 | 5.0 | 5.3 | 5.5 | 5.6 |
5.6
|
|
|
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| Hamilton: |
|
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| Deanwell/Melville/Fitzroy | 5.0 | 5.1 | 5.4 | 5.3 | 5.5 | 6.2 | 6.8 | 6.9 | 6.9 |
6.9
|
| Fairfield/Fairview Downs | 4.8 | 4.8 | 5.1 | 5.4 | 5.7 | 6.0 | 6.8 | 6.7 | 6.2 |
7.0
|
| Te Kowhai/St Andrews/Queenswood | 4.3 | 4.6 | 4.7 | 4.7 | 4.9 | 5.3 | 5.4 | 5.4 | 5.6 |
5.8
|
|
|
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| Cambridge/Leamington | 4.6 | 4.7 | 4.8 | 5.2 | 5.3 | 5.2 | 5.5 | 5.5 | 5.6 |
5.9
|
| Te Awamutu | 5.1 | 5.2 | 5.2 | 5.7 | 6.2 | 6.3 | 6.5 | 6.2 | 6.3 |
6.4
|
|
|
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| Tauranga: |
|
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| Tauranga Central/Greerton | 4.4 | 4.3 | 3.7 | 5.2 | 5.2 | 5.6 | 6.0 | 6.1 | 5.9 |
5.9
|
| Bethlehem/Otumoetai | 3.7 | 4.2 | 4.2 | 4.6 | 4.8 | 4.8 | 4.5 | 4.8 | 5.3 |
5.4
|
| Mt Maunganui | 4.2 | 4.2 | 4.4 | 4.8 | 4.6 | 4.7 | 5.4 | 5.7 | 5.6 |
5.2
|
| Pyes Pa/Welcome Bay | 4.8 | 4.9 | 4.8 | 5.4 | 5.5 | 5.3 | 5.9 | 5.7 | 5.7 |
5.8
|
| Kaimai/Te Puke | 5.4 | 5.5 | 5.6 | 5.8 | 5.9 | 6.2 | 6.4 | 6.2 | 6.2 |
5.7
|
| Whakatane | 5.8 | 6.5 | 6.6 | 6.4 | 7.1 | 7.3 | 6.7 | 6.3 | 6.7 |
6.9
|
| Rotorua: | ||||||||||
| Holdens Bay/Owhata/Ngapuna | 9.7 | 10.7 | 9.4 | 8.7 | 8.3 | 8.7 | n.a. | n.a. | n.a. | n.a. |
| Kuirau/Hillcrest/Glenholm | 7.3 | 7.5 | 6.4 | 5.9 | 6.3 | 6.6 | n.a. | n.a. | n.a. | n.a. |
| Ngongataha/Pleasant Heights/Koutu | 8.2 | 7.2 | 7.9 | 7.7 | 8.0 | 8.2 | n.a. | n.a. | n.a. | n.a. |
| Hastings: Flaxmere | 8.6 | 9.4 | 9.3 | 10.9 | 11.5 | 11.0 | 12.1 | 12.2 | 11.7 |
11.8
|
|
|
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| Napier: Taradale | 4.9 | 5.1 | 5.5 | 5.4 | 5.6 | 5.5 | 5.3 | 6.2 | 6.3 |
6.1
|
| Taranaki: | ||||||||||
| New Plymouth Central/Moturoa | 5.3 | 5.1 | 5.4 | 5.8 | 5.4 | 5.5 | n.a. | n.a. | n.a. | n.a. |
| Waitara/Inglewood | 7.0 | 7.7 | 7.7 | 8.8 | 8.9 | 8.0 | n.a. | n.a. | n.a. | n.a. |
| Whanganui | 9.7 | 9.7 | 10.3 | 9.6 | 10.0 | 14.9 | n.a. | n.a. | n.a. | n.a. |
| Palmerston North: | ||||||||||
| Kelvin Grove/Roslyn | 6.6 | 7.0 | 7.3 | 7.4 | 7.2 | 7.2 | n.a. | n.a. | n.a. | n.a. |
| Palmerston North Central | 5.6 | 6.5 | 6.3 | 5.6 | 5.5 | 6.2 | n.a. | n.a. | n.a. | n.a. |
| Takaro/Cloverlea/Milson | 6.3 | 6.7 | 6.8 | 7.2 | 7.1 | 7.3 | n.a. | n.a. | n.a. | n.a. |
|
|
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| Kapiti Coast: |
|
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| Paraparaumu/Raumati | 5.3 | 5.6 | 5.7 | 5.9 | 6.0 | 6.1 | 6.2 | 6.1 | 6.1 |
5.9
|
| Waikanae/Otaki | 5.5 | 5.8 | 5.8 | 5.9 | 6.5 | 6.8 | 6.6 | 6.7 | 5.5 |
5.4
|
|
|
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| Upper Hutt: | ||||||||||
| Heretaunga/Silverstream | 4.6 | 5.3 | 5.6 | 5.8 | 5.8 | 6.1 | n.a. | n.a. | n.a. | n.a. |
| Totara Park/Maoribank/Te Marua | 5.2 | 5.7 | 6.2 | 6.3 | 6.2 | 6.8 | n.a. | n.a. | n.a. | n.a. |
| Lower Hutt: | ||||||||||
| Epuni/Avalon | 5.6 | 5.1 | 5.5 | 5.8 | 5.2 | 5.1 | n.a. | n.a. | n.a. | n.a. |
| Taita/Naenae | 6.1 | 6.2 | 6.5 | 6.8 | 6.9 | 7.1 | n.a. | n.a. | n.a. | n.a. |
| Wainuiomata | 6.3 | 7.0 | 7.2 | 7.7 | 7.7 | 7.7 | n.a. | n.a. | n.a. | n.a. |
| Wellington: |
|
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| Johnsonville/Newlands | 4.8 | 4.8 | 5.2 | 5.5 | 5.4 | 5.6 | 5.8 | 5.6 | 5.5 |
6.2
|
| Vogeltown/Berhampore/Newtown | 4.1 | 4.6 | 4.9 | 5.4 | 5.2 | 5.5 | 5.1 | 5.5 | 5.2 |
5.6
|
|
|
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| Tasman: |
|
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| Motueka | 4.0 | 4.7 | 5.3 | 5.2 | 5.4 | 5.3 | 5.3 | 5.5 | 5.6 |
5.5
|
| Richmond/Wakefield/Brightwater | 4.6 | 4.8 | 5.3 | 5.3 | 5.3 | 5.5 | 5.6 | 5.6 | 5.8 |
5.9
|
| Nelson: Stoke/Nayland/Tahunanui | 5.1 | 5.2 | 5.3 | 5.5 | 5.7 | 5.8 | 5.9 | 5.7 | 5.7 |
6.0
|
| Blenheim | 6.3 | 6.5 | 6.5 | 7.0 | 7.0 | 6.4 | 6.5 | 6.5 | 6.6 |
6.5
|
|
|
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| Christchurch: |
|
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| Hornby/Islington/Hei Hei | 5.7 | 6.1 | 6.1 | 6.0 | 6.0 | 6.2 | 6.2 | 6.3 | 6.5 |
6.3
|
| Riccarton | 5.2 | 5.5 | 5.0 | 5.7 | 5.0 | 4.9 | 5.9 | 5.2 | 4.9 |
5.1
|
| Woolston/Opawa | 6.5 | 6.6 | 7.4 | 6.3 | 6.4 | 6.6 | 6.8 | 7.3 | 7.2 |
8.0
|
| Ashburton | 8.4 | 6.3 | 6.1 | 6.2 | 7.0 | 6.9 | 7.0 | 6.8 | 6.7 |
7.2
|
|
|
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| Timaru | 5.9 | 6.1 | 6.4 | 6.5 | 6.4 | 6.2 | 6.6 | 6.8 | 6.7 |
6.3
|
|
|
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| Queenstown/Frankton/Arrowtown | 4.1 | 4.5 | 4.3 | 4.6 | 5.2 | 5.0 | 4.8 | 4.9 | 4.7 |
5.3
|
|
|
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| Dunedin: | ||||||||||
| Kenmure/Mornington | 6.5 | 6.3 | 6.7 | 7.9 | 7.1 | 6.6 | n.a. | n.a. | n.a. | n.a. |
| Mosgiel | 5.7 | 5.7 | 5.7 | 6.4 | 6.4 | 6.1 | n.a. | n.a. | n.a. | n.a. |
| South Dunedin/St Kilda | 7.5 | 8.1 | 7.4 | 7.2 | 8.0 | 8.2 | n.a. | n.a. | n.a. | n.a. |
| Invercargill | 7.9 | 8.3 | 8.4 | 8.7 | 9.1 | 9.0 | 6.7 | 9.0 | 9.2 |
9.5
|
|
Source : REINZ / MBIE * Yield is a property's annual rent expressed as a percentage of its purchase price. The yield figures in this table are gross, and are calculated from the REINZ's lower quartile selling price for each area during the previous 6 months, and the median rent for three bedroom houses calculated from new tenancy bonds received by the Ministry of Business Innovation and Employment for the same areas/period. |
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