Residential property investors in Wellington are currently more gung-ho than their Auckland counterparts.
Massey University's Real Estate Analysis Unit has surveyed investors in both cities to find:
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Wellingtonians are more optimistic about future rental levels and vacancy rates than Auckland investors;
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Vacancy rates are currently lower in Wellington than in Auckland (see table below), while the Auckland rental market tends to follow the local housing market and be more volatile.
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However, most investors surveyed thought the rental market would stay the same over the next quarter.
The report said the New Zealand median rent in July for three-bedroom accommodation was $205 per week, with the national figures dominated by the larger cities (especially Auckland). However, a breakdown of data for the Territorial Local Authorities, which don't include the 19 main urban centres, showed the strong link between median rents and average house prices as a percentage of the national figures.
"High growth areas tend to have relatively lower rents," the report said, "and, conversely, low growth areas relatively higher rents".
"This is because in areas where the capital gain is greatest, investors have to accept relatively less annual cash income."
For example, average house prices in the Queenstown/Lakes area are higher than the national average at 108 per cent, but rents are only 86 per cent. In South Waikato, house prices are only 40 per cent but rents are 64 per cent of national figures.
Average rental vacancy rates (by percentage of those surveyed)
| Vacancy rates | Auckland | Wellington | | ----------------- | ------------ | -------------- | | 0 to 7 days | 46% | 70% | | 8 to 14 days | 36% | 28% | | 15 to 21 days | 10% | 2% | | 22 or more days | 8% | 0% |
Source: Massey University Real Estate Analysis Unit: September 1999 quarterly survey, New Zealand residential rental market.
