The last time New Zealand’s median house price was below $500,000 was in February 2017. Today, the median house price is $760,000, and if you live in Auckland that figure is hovering around the $1 million mark.
Thankfully, there are 17 council districts where the median house price is below $500,000.
These areas are mainly in Waikato, Manawatu-Whanganui, Taranaki and the South Island.
For buyers, the median sale price is a good indicator of what properties are typically selling for right now in these locations, and while there will be houses on the market with expectations of selling for more, equally there are properties that will sell for less.
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For investors, here then are the best places to target, in reverse order:
No.5 – Tokoroa (median sale price of $388,000)
With a population of a little over 13,500, Tokoroa, in South Waikato District, is in a handy location that isn’t too far from many of the area’s larger cities. All within an hour’s commute are Hamilton, Tauranga, Rotorua and Taupo.
The area has many big businesses, including Kinleith Mill and Fonterra, and last year global dairy manufacturer OFI opened a new plant.
That provides job opportunities for tenants and has the potential to bring more renters to the area.
Investors in Tokoroa can also get a decent rental yield. This is a common figure used by property investors to analyse properties. Gross yields measure the rent you get compared to a property’s value.
The median rent in the South Waikato district is $450 a week. That means the average property could earn $23,400 a year.
Divide that by the median house price of $388,000, and you’ll see that you could easily get a gross yield of 6% – well above the national average.
No.4 – Hawera (median sale price of $415,000)
Like Tokoroa, Hawera in Taranaki is a dairy town. One of Fonterra’s largest factories is located nearby and employs 1000 people, and the dairy industry as a whole employs more than one in four workers in the area.
The median rental property earns $500 a week. That suggests an average gross yield of 6.3%.
The downside of Hawera is that it has a small population – around 10,000. Many investors prefer to invest in larger cities, the idea being that a larger city offers a bigger pool of tenants. Hawera’s size could make the task of finding a tenant for your rental that much harder.
Opes Partners resident economist Ed McKnight: “House prices in smaller towns tend to be more volatile and can be flat for a long time.” Photo / Fiona Goodall
House prices also tend to go up more consistently in areas with larger populations. On the other hand, house prices in smaller towns tend to be more volatile and can be flat for a long time.
But if you want a more affordable option, Hawera could be worth a look.
No.3 – Greymouth (median sale price of $340,000)
The country’s lowest house prices are often found on the West Coast of the South Island and Greymouth prices are certainly low, with its median sale price a third of Auckland’s.
Also in Greymouth’s favour, for investors at least, is the city’s strong rental returns, with the median weekly rent sitting at $408.
But like other areas on this list, the population is small. Only 8000 people live in Greymouth, and Stats NZ projects that the town’s population will shrink over the next 25 years. Over time, that could mean fewer tenants.
Rental returns in Greymouth are attractive to investors. Photo / Getty Images
No.2 – Invercargill (median sale price of $470,000)
If you prefer to invest in larger cities, then the South Island has options. House prices tend to be low even in areas with large populations.
Invercargill has a population of 57,000 but its median house price is just $470,000.
Because more people live in Invercargill, the economy is more diverse and less exposed. (If the dairy industry experiences a downturn, investments in towns like Hawera and Tokoroa would be adversely affected).
Together, these factors have made Invercargill a popular option for property investors. Some investors can buy two or more properties in Invercargill for the same price as one in Auckland.
No.1 – Ashburton (median sale price of $498,500)
Ashburton takes the top spot. It is an hour’s drive from Christchurch, the country’s second largest city, and unlike other towns on this list, Ashburton has a sizeable population, with 35,000 people calling the town home.
What’s more, Ashburton house prices appear to be about 4% below where I’d expect them to be.
Its median house price is just under the $500,000 mark, according to the REINZ figures for January 2024, so in a year, the town may no longer eligible to appear on this list.
- Ed McKnight is the resident economist at property investment company Opes Partners
