Senior Business Reporter Simon Hartley looks at the latest quarterly report on campus investment with Colliers International student and residential investment sales spokesman Matt Morton.
Surging investor interest in Dunedin's university accommodation has prompted a spike in property sales for the first half of 2015, up almost 15%, from 64 sales a year ago to 73.
Investors, including an increasing number from Auckland, have been buying up both large, million dollar multi flat properties in Dunedin's campus, and also the usually less popular studio flats, all with an eye on getting higher rental yields.
While many in the sector have concerns over the Government's impending tax on second homes owned for less than two years, and the increase in Auckland's loan to value ratio lending from 20% to 30% equity, those changes could have a silver lining for investors looking southward.
Colliers International data reveals that around Dunedin's campus in both the million dollar plus and studio flat categories, first half 2015 sales were higher than the total sales of each category for full year 2014.
Multi flat sales were five for all of last year, and already five for the first half of 2015, while studio flat sales were up from five last year to seven for the first half of 2015.
Residential rental yields in Auckland had been tagged at around 4%, while for the Dunedin campus investment the gross yield had been 8.5% 11%, Colliers International student and residential investment sales consultant Matt Morton said.
Median campus yields in the first quarter were 7.65%. They declined to 6.95% in the second.
''Following the Auckland property boom, we're now experiencing a strong overflow of investors wanting Dunedin property for better [rental yield] returns than they're getting in Auckland,'' Mr Morton said.
Separate Real Estate Institute of New Zealand data last week showed that for August, Dunedin house prices attained a record median of $300,000, from increased buying pressure. August saleswere up more than 50% on a year ago, to 192.
Anecdotally, Auckland interest was singled out as ''well up on last year'', REINZ Otago spokeswoman Liz Nidd said.
''The number of people selling in Auckland and coming south is increasing ... the Dunedin residential market is also [rental] yield attractive to them,'' she said.
In hitting a record Dunedin median price of $300,000 in August, the total sales value rose by $16.4million for the month, to $67million, Mrs Nidd said.
The Colliers' data shows 31 university investment properties sold in the first quarter last year, rising to 40 this year, while second quarter sales numbers rose from 22 last year to 33 this year.
Colliers collates quarterly campus sales from all real estate agencies within the campus area, excluding sales of residential houses.
Mr Morton said investor interest was not confined to just Aucklanders, but also coming from investors countrywide, including some in Queenstown.
Colliers estimates that of 73 properties bought in first half 2015 in the three Dunedin campus areas it covers, Auckland investors had bought 10 and overseas investors six.
Dunedin buyer numbers declined slightly from 39 to 37, while rest of North Island (4) and rest of South Island (11) sales were flat. Five buyer locations were undisclosed. There has been anecdotal commentary of Aucklanders selling one property to buy two or three elsewhere in the regions.
However, Mr Morton said many were buying Dunedin properties for the higher yield cashflows, which offsets the losses of rental yields in Auckland, but gives them breathing space to wait for capital gains from the heated Auckland market.
''Some are becoming uncomfortable in Auckland and coming south.''
He said an Auckland investor with a $800,000 mortgage paying 5.25% interest, but only getting a 4% return, would be losing money.
''They need the cash in the portfolio to allow Auckland [prices] to grow,'' he said.
He said the outside Otago investors were more immune to $1million plus asking prices and were at present beating local investors with higher offers.
Mr Morton did not believe the pending Government tax on second properties would affect investors in Dunedin, given that the average campus ownership period was ''well beyond'' two years.
On the question of the pending rise in LVR restrictions in Auckland, that could ''also work in favour for our market'', if Auckland investors opted to buy in the regions at the minimum 20% equity ratio, instead of 30% in Auckland.
In general, house prices appear set to keep rising on the eve of the introduction of Government tax changes and the LVR restrictions on bank lending.
Whether the duo of dampeners will quell rampant Auckland prices has economists in two minds.
Westpac economist Dominick Stephens said last week's boost to the August REINZ data was possibly from investors attempting to get ahead of the impending changes to the tax rules and LVR restrictions.
''Sales rose in most regions, but Waikato, Wellington and Otago were particularly noteworthy,'' he said in a statement.
ASB economist Kim Mundy said the ''unknown factor'' in the housing sector was the effect of the Government tax and LVR changes, the latter effective from November 1.
''But with turnover already high as we head into spring, and days to sell very low, we expect the housing market to remain very buoyant over the coming months,'' she said in a statement.
Because of the low level of houses for sale, Ms Mundy expected house prices would probably continue to keep rising.
