Mar 2024

Is Property a Good Investment?

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In the world of Wellington's property market, investors are continually seeking opportunities across the property market. Recent data indicates that certain suburbs in Wellington, New Zealand, stand out in terms of high rental yields and growth in rental prices.

High Rental Yields and Growth

Looking into Wellington's property landscape reveals an array of investment potentials. In Wellington City, the median house price reached $930,000 in December 2023, making it the most expensive district within the Wellington Region. In contrast, the Masterton District emerged as the most affordable, with a median house price of $540,000.

Wellington's Rental Market Dynamics

The rental market in Wellington is marked by competitiveness, driven by high demand and limited availability. The national median weekly rent commenced 2023 at a historic high, with Wellington recording a median weekly rent of $660. This represents a significant rise, especially when compared to other regions like Christchurch City.

Suburbs with High Monthly Property Rent Rates

In Wellington, the central city suburbs such as Te Aro, Mount Victoria, and Thorndon are among the most expensive areas for renters. The average weekly rents in these areas range from $600 to $900 for a two-bedroom apartment. These high rates are reflective of the economy, diverse culture, and appealing lifestyle that attract students, young professionals, and families to the city.

Suburbs Experiencing Growth in Rental Prices

The rental landscape in Wellington has been dynamic over the past years, with median weekly rents increasing by 33% in five years. This outpaces the national average, indicating a region that is exceeding national price rises. Notably, the median weekly rent for small residences (1-2 bedrooms) in Wellington hit a record high of $580, underscoring the growth in rental prices in the region.

For potential investors, understanding these dynamics is crucial. The high rents in central city suburbs imply a strong rental market, potentially offering higher yields. However, the increasing popularity of co-living and shared housing arrangements, especially in pricier areas, should be considered as it reflects changing tenant preferences and the impact of rising rental costs.

Hawkes Bay Property Market

The property market in Hawke's Bay has shown notable growth in recent years. As of December 2023, the median house price in the region was $661,000, marking a significant increase from a decade ago. The most expensive suburb, Eskdale, located in the Hastings District, has a median house price of $1,192,350, demonstrating a strong demand in premium locations.

Conversely, Wairoa was identified as the most affordable suburb, with a median house price of $297,050. This variation in house prices across different suburbs indicates a wide range of investment opportunities, from high-value areas to more accessible entry points for investors​​.

Looking forward, the prospects of investing in Hawke's Bay appear promising. The region's property values are currently seen as relatively expensive compared to long-term averages, suggesting a cautious approach for investors seeking value.

Nevertheless, areas like Napier City, with house prices slightly above expected levels, may offer more confidence in potential growth over the next 5 to 10 years compared to other districts. This implies that while certain areas may appear overvalued, there are still opportunities for strategic investments.

In conclusion, the property market in Wellington presents varied opportunities for investors. While certain suburbs command high rental rates, indicating potential for good returns, it's important to consider the overall market trends, including tenant preferences and the potential for growth in rental prices. As always, thorough research and understanding of the local market dynamics are key to making informed investment decisions.

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