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Real estate investors are seeing the biggest gain in the Southland region thanks to its capital gains and rental performance, says the New Zealand Real Estate Institute (REINZ).
There were concerns about the Southland economy after an indication earlier this year that Tiwai Point aluminum smelter owner Rio Tinto was closing one of the region’s largest employers, but prices from the housing have continued to increase.
Home prices in Southland jumped to $ 340,000 in late June from $ 285,000 the previous year, providing a capital gain of 19.3%, the second-highest increase in the country.
At the same time, yields were up 4.9 percent from a year earlier, also the second highest in the country.
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It’s one of the best times in 20 years for investors to borrow money, and Southland offers a great investment right now.
“That Southland continues to deliver such positive returns for investors from both a capital gains and performance perspective means that the region is really ticking all the boxes from a strategic investment perspective,” he said.
“The area will certainly continue to be on investors’ radar in the future, especially now that the 40 percent deposit requirement has been removed with the temporary withdrawal of LVR. [loan-to-value ratios] and now that some of the major banks offer investors the same credit terms as owner occupiers. “
The Auckland region was the worst performing region for residential property investors with the third lowest annual capital gain, 7.6 percent, and the lowest annual return, 3.2 percent.
The West Coast had New Zealand’s highest rental yield of 6.7 percent, and Hawke’s Bay led the country’s capital gains with a 19.7 percent increase from $ 470,000 to $ 562,500, said Reinz CEO Bindi. Norwell.
The West Coast region had the sixth-highest capital gain in the country, increasing 12.8 percent to $ 220,000.
Gisborne also provided strong returns for investors, with the fourth highest annual capital gain at 16.2%, at $ 370,000 to $ 430,000, and the third highest return at 4.6%.
Robyn Edie / Stuff
Real estate investors see the biggest gain in Southland, despite fears about the Tiwai Point smelter closing.
“Despite Covid-19 halting a significant portion of real estate activity in April, all regions of the country saw a solid rise in capital gains for investors as a result of sharp increases in median prices,” Norwell said .
“Once again, the report showed all but three regions, Auckland, Bay of Plenty and Canterbury, with double-digit increases from a capital gains perspective, showing how strong the market was despite the pandemic global made its presence felt in Aotearoa. “
It was one of the most affordable times in the past two decades for investors to borrow money, he said.
Most regions saw a slowdown in the rate of increase in yield, which was not surprising given the six-month rental freeze in March as a result of the coronavirus pandemic, Norwell said.
The rent freeze was due to end on Friday.
“However, none of the drops were particularly dramatic, suggesting that initial fears that yields would be significantly affected by rising unemployment as a result of Covid-19 have been unfounded.
“The only New Zealand region to see a slight increase in yields was Tasman, which saw a slight increase from 3.4 percent in June last year compared to 3.5 percent in the three months ending in June of this year.
“This is most likely because it is the region that has seen the largest increase in rental prices in the last 12 months.”
