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Rental yields in Auckland getting lower says Andrew King to TV3

New data from Trade Me shows the cost of renting property in New Zealand has slowly increased – but not in Auckland where house prices continue to rise.

Trade Me Property's rental price index shows rents have risen 5.4 percent over the past year, but there has been no change in Auckland.

Property prices in the city of sails have increased by 10 percent in the last year, with the average property value now more than $700,000.

But data from the New Zealand Property Investors Federation s (NZPIF) shows a different story – they say Auckland rental prices have gone up by 6.7 percent over the past year.

"Rental yields in Auckland are getting lower as house prices are increasing at a faster rate than rental prices," says NZPIF executive officer Andrew King.

"When house prices are increasing, tenants trying to save for a deposit on their own home often try and save money on their rental payments. For instance a young couple in a two-bedroom rental may downsize to a one-bedroom or get a border into the spare bedroom."

"Because of this, when the housing market is seeing price rises we can actually see a reduction in demand for rental prices, reducing the potential for rental price rises."

For the full TV3 story go here

Tags: rental return - andrew king

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