REINZ reveals highest performing region for residential investors

by Roxanne Libatique25 Mar 2021

The Manawatu/Wanganui region outshone other regions in New Zealand in Q4 2020, taking the top spot as the highest performing region for residential investors with the second-highest capital gains in New Zealand and the fourth-highest yield, according to the Real Estate Institute of New Zealand (REINZ).

According to REINZ’s latest Capital Gains and Rental Yields Report for Q4 2020, this was the first time since Q1 2020 that Manawatu/Wanganui has made the top three list for the best region for investors.

The report revealed that capital gains in the Manawatu/Wanganui region increased by 25.3% for the three months ending December 2020 compared to the same time last year, with median prices rising from $400,000 to $501,000. Yields in the region also hit 4.0%, making it the standout region for residential property investors in New Zealand.

West Coast, the region that topped the list last quarter, took second place this quarter in terms of providing strong returns for investors. It recorded the highest yield in the country at 5.8% – making it the only region to exceed the 5% mark – and the sixth highest capital gains in the country (up 20.2% from $209,000 to $251,200).

Taranaki placed third this quarter, recording the third-highest rental yield at 4.1% and the fifth-highest capital gains for the country (up 21.0% from $405,000 to $490,000).

By contrast, the report found that Nelson had the lowest capital gains this quarter (up 10.8% from $600,000 to $665,000) and the third to lowest annual yield of all regions (3.4%) – making it the worst-performing region for residential property investors.

Wendy Alexander, the acting chief executive at REINZ, commented: “As house prices have continued to rise, we’ve seen yields continue to fall, showing that some of the strong yields we’ve seen previously are no longer available to investors.

“Again, the regions with the best returns for investors continue to be some of the smaller and more ‘affordable’ regions, which again points to the importance of due diligence before buying an investment property,” she continued. “Although there is the obvious convenience of a rental property in your region, sometimes there are advantages to looking ‘outside the box’ and considering where your best investment opportunities lie and factoring in the cost of using a property manager to offset the physical distance.”

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