Top 5 spots to look for yield in Auckland

Traditionally, Kiwi investors are driven by yields because they want to see tangible returns from their portfolio.

Yet Auckland’s spectacular price growth in recent times means much of the coverage of the market is focussed on capital gains. 

That price growth also means that Auckland yields have declined sharply in recent times, as landlords.co.nz has reported. 

However, there are some SuperCity suburbs which return far better yields than might be expected.

Apartments in central suburbs and houses in suburbs to the South make up a new list of Auckland’s highest yielding areas, compiled by CoreLogic for landlords.co.nz.

It is these suburbs which should be of interest to investors who are in the property business for the long haul.

While the current market focus might be on capital gains, cash flow should still be king for serious investors, Auckland Property Investors Association president Andrew Bruce said.

“Novice investors might be driven by the prospect of capital gain – and the fear of missing out. But that is not the case with seasoned investors.”

Just as with any business maintaining a healthy property investment portfolio comes down to serviceability, he said.

“Poor serviceability impacts on an investors ability to grow and develop their portfolio, as banks based their lending assessment criteria on serviceability.”

This means the prospect of decent yields, which make for stronger cash flow, is critical.

Bruce said that if an investor focused solely on capital gain prospects and bought properties with poor serviceability that could have a negative impact on their portfolio.

However, just last week, the Reserve Bank said the average gross rental yield in Auckland has fallen to a historic low of around 3%.

This makes it a struggle to find Auckland properties which produce higher yields than the current citywide average – although it seems there are some prospects are out there.

According to CoreLogic, Auckland’s highest yielding suburbs, divided by property type, are:

Apartments:
1. Grey Lynn / Arch Hill (1 bedroom) – 7.1%
2. Central West (1) – 6.8%
3. Newton / Grafton (1) – 6.7%
4. Newton / Grafton (2) – 6.2%
5. Central West (2) – 6.1%

Flat (2 bedrooms):
1. Manurewa North – 5.1%
2. Otahuhu – 4.8%
3. Papatoetoe South – 4.6%
4. Papatoetoe North – 4.4%
5. Papakura/Drury/Karaka – 4.4%

House:
1. Takinini / Ardmore (3 bedrooms) – 4.6%
2. Manukau Central (3) – 4.5%
3. Manurewa North (3) – 4.5%
4. Weymouth (3) – 4.5%
5. Waiuku (3) – 4.5%
6. Otara (3) – 4.4%
7. Manurewa North (2) - 4.4%
8. Papakura/Drury/Karaka (3) – 4.4%
9. Mangere (3) – 4.3%
10. Mangere (4) – 4.3%