The West Coast region has taken the top spot as highest performer for residential investors.

It has the highest rental yield and second highest capital gains across New Zealand, data from REINZ’s latest Capital Gains and Rental Yields Report show.

Investors reaped a rental yield of 5.3 per cent from West Coast properties for the six months ending June 2022. Although it was an annual drop of 0.1 per cent, it was the highest yield recorded in the 16 regions.

Rental yield is the measure of rental income against purchase price. The report calculated yield by looking at annualised median rent compared to a region’s median house price.

POSITIVE CHANGE

Capital gains were up 19.4 per cent over the same period, the second highest capital gains across the country. The median price for residential property rose from $289,000 in the first half of last year to $345,000 in the first half of this year.

The region also had the greatest annual rise in rental price, up 16.7 per cent from the first half of last year. Combined, these factors result in a positive change in rental yield.

Although the West Coast is small in residential property terms, it has always ranked highly for investment performance, but dipped behind Manawatu/Whanganui in the second half of last year. It has now regained top spot. Manawatu/Whanganui has now dropped out of the top five.

REINZ property management head Jo Rae says the West Coast tends to buck the trend compared with other regions across NZ.

She says fundamentals, such as forecast population growth and property supply over time, in the market keep property prices below the NZ median.

Taranaki ranked second, in terms of providing strong returns for investors. The region had the third highest capital gains, up 17.3 per cent as the median property price rose from $537,000 in the first half of last year to $630,000 in the first half of this year.

SOUTHLAND SUCCESS

The region ranked fifth in terms of rental yield at 3.8 per cent, a moderate drop of 0.3 per cent compared to the same period last year.

Southland was the third highest performer, with second highest rental yield at 4.4 per cent and the seventh highest capital gains, up 12.2 per cent from $401,000 to $450,000.

At the other end of the scale, Auckland was the poorest performing region for residential investors. The region had the third lowest capital gains, up 6.4 per cent from $1,100,000 to $1,170,000, and the lowest annual yield of all regions at 2.7 percent.

Wellington follows closely as the second poorest performer with the lowest capital gains, up 5.1 per cent from $875,000 to $920,000, and an annual yield of 3.4 cent.