Auckland yields improving

Friday 2 November 2018

There has been a slight rebound in rental returns for Auckland landlords – but it’s not due to a rapid rise in rents.

By The Landlord

Barfoot & Thompson’s latest quarterly rental market update shows the trend of slower-paced rent rises continued through the third quarter of this year.

The cost of renting a typical three-bedroom* home in Auckland was $559 in the three months ending 30 September 2018.

This was just 3.2% more than it was during the same period in 2017.

Barfoot & Thompson director Kiri Barfoot says it represents a real cost increase of around $17 per week as compared to last year.

“The increase is $2 lower than last quarter and is now the lowest average weekly rent rise that we have observed in well over two years.”

The average weekly rent for all properties (all bedroom sizes and eligible suburbs) was also lower than the historical norm, up 3.5% year-on-year to $563.

This is as compared to recent increases of as much at 4.8%.

Central Auckland saw the biggest rise in rents of any of the regions: rents were up by 5.46% over the quarter.

Barfoot says this was primarily due to the growing number of large, luxury apartments pulling in higher weekly rents.

West Auckland rents came in at second place with a year-on-year increase of 5.05% for the quarter.

However, despite the slower pace of rent growth, it seems that rental returns are on the way up.

Barfoot says that more than two-thirds of the Auckland suburbs they reviewed this quarter showed an increase in gross yield over the same period last year, with all but a handful sitting above 3% return.

“While it is an ‘on paper’ measure only, it’s a welcome move in the right direction for landlords.

“This follows a period of relatively flat gross yields during 2016 and 2017, and declining yields prior to that, so landlords will be relieved to be making up some lost ground.”

Low interest rates and a desire to keep properties occupied with good tenants could be contributing to landlords’ reluctance to raise rents further, she says.

“That said, many landlords will be looking at their increasing operating and compliance costs, as well as the changes that may come from pending rental reforms, and reassessing.

“It remains to be seen how these factors will impact the cost of renting in future.”

*Three-bedroom properties make up the bulk of the agency’s 16,500 strong portfolio and so are used as a standard example.

Read more:

Tight supply means rent rises 

Comments from our readers

No comments yet

Sign In / Register to add your comment

Property News

Homesellers required to provide IRD number

Investors who flip properties are currently subject to the bright line test, but owner-occupiers are not. That is now set to change.

House Prices

Market rebound coming - Westpac

The cancellation of a capital gains tax combined with lower mortgage rates will be game changing for the housing market, believes Westpac’s chief economist.

Commercial

Transforming commercial investment

Many investors are switching from residential to commercial property and now a new platform aims to makes access to the sector easier.

Mortgages

Investor lending weak in March

The latest Reserve Bank lending data reveals investors borrowed more than $1 billion in March, the highest figure since November, but a 10% fall on the same period last year.

Site by PHP Developer