Investors looking for strong capital gains and good rental yields might find some luck in the region
Property investors looking for both strong capital gains and good rental yields will probably find some luck in Southland as it is currently considered as the strongest performing region, according to the Real Estate Institute of New Zealand (REINZ)’s latest report.
The REINZ’s latest Capital Gains & Rental Yield Report revealed that the Southland region has the highest capital gains and second highest yield among all regions in the country – with its capital gain increasing by 20.5% for the three months ending August 2019 and median prices jumping from $245,599 to $296,000. Its yields also increased 5.2% year-on-year, making it the standout region in the country.
Bindi Norwell, chief executive at REINZ, commented that most regions were high on one measure but low in the other – adding that Southland’s results meant that “it was a very good region for investors to have investment property over the past year.”
“Similarly, investors in the Manawatu/Wanganui region are likely to have been quite pleased with how their residential investment properties have performed over the past year,” Norwell said, as reported by Landlords.co.nz.
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On the downside, Auckland’s capital gains fell by 1.5% but its yields increased from 3.2% to 3.4%, which may have been driven by continued shortage of rental stock and increasing rental prices. West Coast also saw a drop of 11.1% year-on-year capital gains, while Marlborough saw a drop of 2.2%.
Norwell explained that low lending rates for property investors and the fact that other forms of investments have lower return rates meant that residential property is becoming more positive for property investors.
“This is particularly the case at the bottom of the South Island and the middle of the North Island – just not in Auckland,” Norwell concluded.
