Manawatu/Whanganui property is tops for investors

Manawatu/Whanganui is the best-performing property market for property investors, new Real Estate Institute data shows.
The region offered the second-highest capital gains in the country with a year-on-year rise in its median price of 25.3 per cent, from $400,000 to $501,000, over the three months ending December 2020.

Over the same period, the region had the countrys fourth-highest annual yield at 4 per cent.

That combination meant Manawatu/Whanganui took the top spot for investors from the West Coast which was the highest-performing region in the previous quarter.

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The West Coast dropped to second place. It had the highest yield in the country at 5.8 per cent, which made it the only region to offer a yield of more than 5 per cent, and the sixth-highest capital gains (up 20.2 per cent to $251,200).

Two regions came in as third equal in the rankings. They were Taranaki and Tairwhiti Gisborne.

Taranaki had the third highest rental yield in the country at 4.1 per cent and the fifth-highest capital gains (up 21 per cent to $490,000), while Tairwhiti Gisborne had the highest capital gains (up 36.6 per cent to $560,000) but the seventh-highest yield at 3.7 per cent.

Southland has often been ranked as the best region for investors in the past. But this time it remained in sixth spot because although it had the second-highest yields (4.5 per cent) it was ranked 10th for capital gains (16.6 per cent).

Brook Sabin/Stuff
The Manawatu/Whanganui region is currently the best performing region for investors.

Real Estate Institute acting chief executive Wendy Alexander said the ongoing increases in house price meant that yields had continued to fall.

Not a single region had a yield in excess of 6 per cent and for the first time Auckland yields fell below 3 per cent. For that reason, some of the strong yields seen previously were no longer available to investors.

Alexander said that the regions with the best returns for investors were some of the smaller and more affordable areas. She said that pointed to the importance of due diligence before buying an investment property.

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.

Every region in the country experienced double-digit increases in capital gains in the last few months of 2020 with six out of the 16 regions seeing uplifts in excess of 20 per cent, she said.

Sometimes there are advantages to looking outside the box, Wendy Alexander from the Real Estate Institute says.

However, according to Reserve Bank data, lending to investors in this quarter increased by 71.1 per cent, as people took the opportunity to take advantage of the removal of LVRs and low interest rate environment, suggesting that investors are happy to take a longer-term approach to investing.

The report found that Nelson property performed worst for investors as the region had the lowest capital gains (up 10.8 per cent to $665,000) and the third-to-lowest annual yield of all regions (3.4 per cent).

Auckland and the Waikato were also comparatively poor performers for investors, sharing the second-worst ranking.

Auckland had the lowest yield in the country (2.9 per cent) and was ranked 11th for capital gains (up 16.6 per cent to $1,020,000), while Waikato was ranked 13th for yields (3.5 per cent) and 14th for capital gains (up 15.1 per cent to $665,000).


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