The West Coast of the South Island is the only region in the country to see rental yields top 5 percent, according to the Real Estate Institute of New Zealand (REINZ).
REINZ's latest edition of the Capital Gains and Rental Yields Report shows that it was the standout region for residential property investors, with yields up 6.3 percent from last year and capital gains up 27 per cent for the three months ending September 2020 from the same period last year. The province's median sales price went up from $196,000 to $249,000.
The second place for the strongest investment returns was Taranaki. It had the third highest capital gains in the country (up 18.8 percent from $383,000 to $455,000) and the fourth highest yield at 4.3 percent.
Gisborne followed closely behind with the highest capital gains for the country (up 27.6 percent from $384,000 to $490,000) and the seventh highest yield at 4.0 percent.
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At the other end of the scale, REINZ reported that Tasman had the second to lowest capital gains (up 9.6 percent from $615,000 to $674,000) and the second to lowest annual yield of all regions (3.5 percent), making it the worst performing region for residential property investors.
REINZ chief executive Bindi Norwell says smaller regions in the country continue to provide the best returns for investors.
“Many investors want to purchase investment properties in their home town to make it easier to manage and undertake maintenance, for example, but sometimes the best returns can be found a little further afield.”
The lowest capital gains in the country were in Tasman and Nelson with gains of 9.6 percent and 9.4 percent respectively, Norwell says.
She says the third quarter of this year was a difficult time for investors who were relying on strong yields from their investment portfolio, with not a single region experiencing an uplift in yield when compared to the same time last year.
“Any investors that have sold their investment property in the last few months will no doubt have been pleased with the result – especially as all but two regions (Tasman and Nelson) have seen double-digit increases in capital gains,” she adds.
The regions with the biggest increase in capital gains for the 3 months ending September 2020 compared to the 3 months ending September 2019 were:
The regions returning the biggest yields to investors for the three months ending September 2020 compared to the same quarter last year were:
