Auckland dominates the national residential property investor market for capital gain claiming the top 59 suburbs in the country according to the new Westpac Property Investor Report.
The Westpac Property Investor Report identifies the best suburbs for capital gain and gross yield from March to September this year in seven main centres across the country - Auckland, Christchurch, Hamilton, Wellington, Dunedin, Tauranga, and Palmerston North. It looks at both three bedroom houses and two bedroom apartments (where applicable). Summaries of the results for Auckland are set out below.
South and East Auckland dominate the top tier for capital gain in three bedroom houses with Mangere Bridge (17.5%), Glen Innes (17.5%) and Panmure (14.8%) all featuring. At the top end of the table, returns are between 14.5-17.5% while at the bottom end suburbs among the top 60 are delivering between 11.9-12.5%.
As a comparison, reasonable capital gain can be made in Christchurch, with the top two suburbs being Hornby (11.5%) and Hei Hei (10.8%). The other centres though offer slim pickings, the highest for each centre being Hamilton (5.3%), Wellington (4.3%), Dunedin (3.9%) Tauranga (3.6%) and Palmerston North (2.5%). Auckland’s dominance also extends to capital gain in two bedroom apartments with the top suburb, Mt Wellington, delivering 17.4%, well ahead of any other centre.
However, it is a different story in gross yields for rental property, with Auckland not featuring at all in the top 10 suburbs nationally.
In Auckland, Wellsford is the best area for gross yield in houses with 7.1% and Central Auckland remains tops for the apartment market with 6.5% in gross yield.
Across the rest of the country, three bedroom houses produced the top gross yields for rental property of between 7.3%-8.4% with half of the top 10 suburbs coming from Dunedin. Porirua and Christchurch also featured. By contrast the top 10 suburbs for gross yields in apartments ranged from 6.8-7.6% in Wellington, Christchurch and Dunedin.
Otara was the only suburb to feature in the Auckland top 10 for both gross yield and capital gains with capital gain results of 15.9% and gross yield of 5.9%.
Westpac’s General Manager Retail Bank Ian Blair says the report helps investors to identify market investment trends.
“When deciding to invest in property, it is important to decide the best outcome for you – is it to sell the property and realise a capital gain or is it to earn income through a good yield return. This will ultimately drive where and how you decide to invest.”
He says Auckland’s residential market continues to show strong capital growth with average capital gains sitting at 12.2% for a three bedroom house across the region. “A closer look at the numbers shows the growth is being driven by Auckland’s southern and south eastern suburbs with areas such as Mangere Bridge, Otara, Mangere, Panmure and Glen Innes becoming some of the highest ranking suburbs in the country.”
As a general rule, cashflow works better on a high gross yield property because of regular rental income. Investors looking for capital gain often accept lower cashflow in the expectation of an increase in the value of the property mostly based on location and desirability.
Accurately accounting for insurance, rates, maintenance and periods of vacancy are all important considerations in the decision making process.
Estimated valuations in the report are based on specific property details such as size, number of bedrooms, bathrooms and recent sales. The estimated valuation for the average rental property also focuses in on rental stock in each of the suburbs.
For the Top-10 suburbs for Capital Gain and Gross Yield returns in Auckland, Christchurch, Hamilton, Wellington, Dunedin, Tauranga, and Palmerston North, click here.
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