CVs prompt investors to increase rent

New Auckland CVs will lead a fifth of investors to increase the rents their charge on their properties, new research from Crockers shows.

Friday, December 5th 2014, 12:00AM

by The Landlord

Crockers has carried out its latest Property Investment Index, in which it asked Auckland landlords about the new council valuations.

It found that 44% had had a “quick look” at the impact on values in the suburbs in which they owned property. Another 15% had looked carefully and more than 40% had not looked at all.

A third of investors expected their returns to decrease as a result of the new CVs and 40% expected no change in returns.

Two-thirds of investors said the new CVs on their properties would not change their plans but 19% said they now planned to increase the rent they charged. Another 11% planned to sell because of the new valuations.

The average CV increase across Auckland between 2011 and 2014 was just under 30%. Crockers said the only other city to experience significant gains in property values over that time was Christchurch, where prices had risen 26% over the past three years.

Estimated average rental returns had tracked down significantly for Auckland over that period, from almost 5.5% in 2011 to just above 4.5%.

Christchurch had reported strong rental price growth over the same three years.

Crockers' report said: “While this is clearly impacted by the earthquake recovery, it represents a significant investment opportunity which is delivering both capital gains and strong investment returns. What remains to be seen is how and when this might change as recovery efforts begin to catch up with demand in the area.”

Wellington and Dunedin recorded much more stable prices and rents.

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