According to the latest property investment numbers from the Real Estate Institute of New Zealand (REINZ), capital gain returns in Southland increased by 20.5% for the three months from June to August 2019, on the back of a median price increase of $245,599 to $269,000 for the region, while rental yields climbed 5.2% from the prior year.
The Manawatu-Whanganui region also made a strong showing, having gains of 23% and yields at 4.7% while Otago came in fourth of the 16 regions, gaining 13.1% to $483,000.
Otago rental yields climbed from an average median rental of $350 a week to $390 a week, or 4.2%, the report notes.
This compares with an average of $490 a week in Wellington and $550 a week in the Auckland region.
But if it is exclusively high rental yields you are seeking, calculated as a percentage of the median price, you would head to the West Coast where rental yields were at 6.9% for the period, off an average rental of $265 per week.
REINZ chief executive Bindi Norwell said the majority of the regions were high in one measure and low in the other, "so for Southland to have a strong result in both capital gains and yields indicates that it was a very good region for investors to have investment property in over the past year''.
Gains were led by Invercargill, which increased by 24.1% and Gore district, having a 20.5% improvement. The latter also had the highest rental yield, at 5.6% off an average weekly rental of $280.
Ms Norwell said that conversely, investors in Auckland saw capital gains fall 1.5%, although regional yields still increased marginally from 3.2% to 3.4%.
"This is a result of the continued shortage of rental stock which continues to push up rental prices.''
She said there were mixed results across the Auckland region, the highest gains being in Papakura and North Shore, at 5.6% and 2.4% respectively, while Manukau City had the largest single drop in capital gains, down 3.2%.
"With some of the lowest lending rates available to residential property investors and other forms of investment having lower return rates, residential property is looking increasingly positive for investors at the bottom of the South Island and the middle of the North Island, just not in Auckland,'' she said.
