Rental yields


PHOTO: Rental yields

Rental growth is now outpacing property values. Interestingly, the highest rental yields can now be found outside the main centres. Simultaneously, the 10 lowest yielding suburbs are all located in Auckland. Factor in the dip in values in these expensive parts of Auckland, total returns over the past year haven’t been that flash. Meanwhile, the tax ring-fence on rental property losses (which kicked in on Monday), will also knock the returns for some investors, although we don’t anticipate that it will have a major market-wide impact.

CoreLogic Senior Property Economist Kelvin Davidson writes:

After a long period where average property values rose more quickly than rents, and hence gross rental yields fell, the situation has been reversing a little in recent months (see the first chart). Since the start of 2018, rents have been outpacing property values, and in the year to February 2019, the rise in national rents (5.6%) wasn’t far off double the increase in values (3.0%).



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