Northeast Valley in Dunedin yesterday, where there is a 7%
gross rental yield on houses valued at $218,000. Photo by
Seven Dunedin suburbs were among the top 10 nationwide
for delivering the top gross yields on rentals, the Westpac
Property Investor Report has found.
Two key factors are Dunedin's relatively cheap housing market
and the consistently strong student demand, which deliver
some of the best gross yields around the country, Westpac
general manager, retail bank, Ian Blair said yesterday.
''As property investors come back into the market, the report
underlines the need for them to know what they want to
achieve and how they want to do it,'' Mr Blair said.
Gross rental yields are the rent paid, before deductions of
tax and depreciation, rates and insurance, maintenance or
repairs, are taken into account.
The report identifies the best suburbs for gross yield and
capital gains, in seven centres across the country, looking
at two-bedroom apartments and three-bedroom houses.
Mr Blair said, for three-bedroom houses, Forbury, in Dunedin,
topped the country with an 8.3% gross yield and South Dunedin
was second on 8.2%. St Kilda, Calton Hill, Northeast Valley
and Brockville also made the top 10 for gross yield, but
capital gain in Dunedin was not so strong, where Auckland and
Aside from Brockville featuring well for gross yield at 6.9%,
its value as a suburb for rental property investment had
Dunedin's best capital gain at 4.3%, 1% ahead of Maori Hill
and Northeast Valley.
Between the seven centres - Dunedin, Auckland, Christchurch,
Hamilton, Wellington, Tauranga, and Palmerston North - the
range of top gross yields for three-bedroom houses was 6.8%
to 8.3%. Mr Blair said investing for yield and capital gain
required two different strategies. Investors had to
understand capital gain could be a shorter-term prospect,
while rental yield was more commonly long term.
Auckland dominated capital gain returns, these ranging
between 14.4% to almost 19% in the top bracket, while the
rest of the country had far lower capital gain; the highest
being Wellington on 4.9%, Hamilton 4.8% and Dunedin 4.3%