Report also looks at the worst-performing area
The West Coast region has dominated others in New Zealand, earning the top spot as the highest-performing region for residential investors with the highest yield in the country and the fourth-highest capital gains, according to the Real Estate Institute of New Zealand (REINZ).
REINZ’s Capital Gains and Rental Yields Report for Q1 2021 showed that yields on the West Coast were 5.4%, making it the only region with a yield in excess of 5%.
Capital gains in the region also increased by 26.3% for the three months ended March 2021 compared to the same month last year, with median prices jumping from $229,000 to $289,250 – making it the standout region for residential property investors in New Zealand.
“As house prices have continued to rise at such a strong pace across the country, naturally, we’ve seen residential property yields continue to ease or flatline in all regions,” said REINZ acting chief executive Wendy Alexander.
“However, with some of the strongest capital gains we’ve seen in a long time, it’s not surprising that investing in residential property still remains a popular asset choice for investors – especially ‘mom and pop’ investors who are looking to fund their retirement.”
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The Gisborne and Manawatu/Wanganui regions both took second place for providing solid returns for investors, according to REINZ’s report.
Gisborne had the highest capital gains in the country at 39.5% (from $430,000 to $600,000) and the eighth-highest rental yield at 3.6%. Meanwhile, Manawatu/Wanganui, which topped the list last quarter, had the third-highest capital gains in the country (up 29.4% from $425,000 to $550,000) and the sixth-highest yield in the country at 3.8%.
Alexander commented: “The trend of a number of the smaller regions providing better overall returns has again continued.
“However, it will be interesting to see how the re-introduction of the LVRs and the March 23 changes affect the sector in the months ahead and whether investors look to either exit or more widely diversify their portfolios.”
By contrast, Canterbury and Southland recorded the lowest capital gains in the country, with gains of 16.8% and 13.0%, respectively.
Tasman had the fifth to lowest capital gains (up 18.8% from $665,000 to $790,000) and the second to lowest annual yield of all regions (3.1%), making it the worst-performing region for residential property investors.
