If you want to buy property in New Zealand then Auckland is no doubt the place to go for capital gains. Timothy-Terence provides great deals in buying properties in Auckland. Even so, Dunedin is quickly becoming a very profitable place for long-term investment according to the latest reports from Westpac. The report looks into the best suburbs for gross yields and capital gains across New Zealand.
The great property market of Auckland has made it the best place for investors to make money from their capital. The value of three-bedroom properties in the area has grown between 14 and 19% across the past year. Dunedin was shown to be one of the best picks for long-term landlords though; placing seventh in the top ten suburbs for gross yields.
Forbury in Dunedin proved to be the best performer with an 8.3% yield. One of the reasons that Dunedin is such a great area for rental investments is because the properties there are cheap in relation to the rental income from the property. It was also boosted thanks to all the students living in the area. All the demand for accommodation is bound to drive yields up.
There is also clear evidence of the benefits of Christchurch’s rebuild programme, making the area great for capital gains and yields. A three-bedroom home in Horby and Hei Hei returned gains of 14% and 13.5% respectively. Addington proved to be the eighth best rental market in terms of apartments, offering up to 6.5%.
There is a lack of properties in Christchurch that is driving capital gain, while the rental market has shown a strong demand for both the locals and people moving into the area thanks to the rebuild. This is increasing the yield for rental properties, and this growth has been spectacular in recent years.
Westpac have done reports on capital gains in the past, but this is the first time that the report has looked into rental performances as well. With investors stepping into the space left behind by first-time buyers following a clampdown on low-deposit loans, the report should serve as a great investor guide.
Even so, an investor should be clear about what they want. Investing in a property for gross yield and capital gain takes two different strategies. It’s important that an investor understands this before investing. Capital gains tend to be short-term projects, while yield is a long-term strategy.
The report on westpack focused on the areas of Auckland, Hamilton, Christchurch, Wellington, Tauranga, Dunedin, and Palmerstone North; focusing on two-bedroom apartments and three-bedroom homes. When it comes to rentals, the top 10 suburbs for three-bedroom rentals produced gross yields of between 6.8% and 8.3%, with apartment yields ranging between 6.4% and 7.5%.
Five of the top 10 apartment suburbs are found in Auckland, with Melville in Hamilton taking the top spot. In terms of capital gains, Auckland was the clear winner again when it came to bigger houses and apartments. The highest capital gain on three-bedroom houses came from Glen Innes, which has an annualized 18.9%. Mount Wellington served up the best gains on apartments at 16.2%.
The rest of New Zealand saw lower gains outside of Auckland and Christchurch. The best suburb for capital gains on three-bedroom homes in Hamilton was Claudeslands with 4.8%. It was Brockville in Dunedine with 4.3%, and Berhamore in Wellington with 4.9%.
The report serves to show the diversity of the New Zealand property market. This is great because property investors have a lot of different options, whether they want to find something that’s short term or they’re looking for a long-term yield for better cash flow.
The analysis of capital gains in the report was based on just rental properties and accounted for the changes seen over the past three years. The gross yields were discovered by dividing the annual rent of a property by the estimated value of the rental stock of the whole suburb.
So the best locations to buy property in New Zealand depends on what you want the property for. Auckland is easily one of the best locations, however. Ask yourself if you want capital gains or yields, and go from there.
One thing is for sure; the property market is doing pretty well in some places, so you’re guaranteed a good return on your investment.