Auckland rent yields drop

The average yield on an Auckland rental property dropped in the year to September, even as prices stagnated, new data from Barfoot & Thompson shows.

Thursday, October 6th 2016, 12:00AM

by The Landlord

It has released its latest suburb report, for September, which shows that across the city, the average sales price for three-bedroom homes for the agency was $957,423 and the average rent $522. That means a gross yield of 2.85%.

That’s down from 3% in August. From that, investors must subtract expenses such as maintenance, rates, insurance and interest costs.

Yield was highest in central Auckland, where the average rent per week was $912 and landlords could expect 4.88% yield. In Karaka, with an average sale price of more than $2 million and average rent of $537, the yield is just 1.22%.

QV noted this week that investors were turning to other parts of the country as new 40% deposit requirements made it harder for them to purchase in Auckland.

Broker Glen Mcleod said many were finding they could achieve better yields in prosperous centres outside Auckland, too, which made their deals more appealing to banks.

“You’re struggling to get very good yield in Auckland but in some situations, Whangarei, Rotorua and Hamilton the yields are greater so it’s easier to lend.”

Property investor Debbie van den Broek is one who has shifted her focus firmly to properties that provide cash flow. She said she was looking at areas such as Rotorua rather than Auckland, for that reason.

“The market is near the top in the high-gains areas. Cash flow is what gets you through a downturn, what the property is worth is irrelevant to what is coming in each week.”

She said she would look for quality towns where there was a strong industry base to support rental income.

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