Quarterly Auckland rental update

Returns for Auckland landlords look to be on the up, with average gross rental yields in over half the city's suburbs rising in the first half of 2017 compared with the same period last year.

  • Auckland's average rental yield rose for the first time in three years.
  • Rental yields climbed in roughly half the city's suburbs, with an average return of 3.04%.
  • Across Auckland, average rent for Q2 2017 was 4.9% more than the same time last year. 

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Rental yields back on the upswing

Returns for Auckland rental property owners are looking up, following a steady decline in rental yields observed since 2014.

"On the whole, this is good news for rental property owners. A change in direction of rental yields is exactly what you would expect to happen at some point in response to moderate but consistent increases in rent, and slowing of house sales prices," said Barfoot & Thompson Director Kiri Barfoot.

Understanding yield

Yield is an income return on an investment. 

To generate the gross rental yield, calculate the gross annual income of the property and divide it by the purchase price. When generating net rental yield, you'll need to take other expenses such as mortgage and rates into consideration. 

Our data shows that the average rent for a three-bedroom home in Auckland was $537 a week as at July 1, or $27,924 a year, while the average sale price* was $917,415, giving a gross yield of 3.04%. 

"While that's only slightly up on 2016 for the same period (which had a gross yield of 3.00%), it does arrest the fall in yield seen since 2015, when the city-wide average was 3.25% and 2014, when it was 3.70%," says Ms Barfoot.

Areas of movement

"The upward trend in rental yield was most obvious in the Central Suburbs, which include most of the old Auckland City suburbs west of the Southern Motorway, as well as on the North Shore."

In the Central Suburbs, 13 of the 19 suburbs surveyed saw increases in yields compared with 2016. Top performers were: 

  • Ponsonby - up from 2.27% to 3.19%
  • Grey Lynn - up from 2.58% to 3.05%
  • Onehunga - up from 3.03% to 3.15% 

Those continuing to trend downwards:

  • Westmere - down from 2.87% to 1.80%
  • Mt Eden - down from 2.66% to 2.22%

On the North Shore, yields lifted in 12 of 15 suburbs included in the survey, compared with 2016. Rothesay Bay had the biggest lift, from 2.94% to 3.79%, while Albany climbed from 3.11% to 3.38%. 

In Auckland Central, gross yield was 4.28% - up from 3.94% the year before and one of the best in the Super City. 

Please scroll data
3 bdrm properties in Q2
 2017  2016
Average sale price Average rent Gross yield Average sale price Average rent Gross yield
Auckland average $917,415 $537 3.04% $895,347 $516 3.00%
Auckland Central $1,119,125 $922 4.28% $1,170,045 $887 3.94%
Central Suburbs $1,185,727 $607 2.66% $1,152,046 $583 2.63%
Eastern Suburbs $1,255,002 $652 2.70% $1,178,681 $618 2.73%
Franklin/Manukau Rural $761,337 $426 2.91% $696,493 $412 3.08%
North Shore $972,400 $570 3.05% $980,482 $551 2.92%
Pakuranga/Howick $971,965 $535 2.86% $1,006,306 $519 2.68%
Rodney $875,100 $512 3.04% $895,982 $488 2.83%
South Auckland $682,155 $478 3.64% $649,993 $452 3.62%
West Auckland $754,309 $488 3.36% $742,879 $467 3.27%

Auckland rents continue steady upward trend

Across Auckland, average rent increased by 4.9% in the April to June quarter (Q2) of 2017, compared with the same quarter the year before. Average weekly rent across all property types and locations was $531, up from $506. 

"The city-wide average of 4.9% this quarter is slightly down on the 5.2% increase recorded the year before, between the same quarters in 2015 to 2016.
"Rent isn't as closely tied to property sales prices as people might expect. It is more closely aligned to people's income and the landlord's overheads for the property. Rent increases remain fairly consistent at or around 5%," concluded Ms Barfoot.  

* Analysis based on Barfoot & Thompson tenancies as at 1 July 2017 and sales over the past six months for three-bedroom properties. Gross yield calculated using average sales price and average weekly rent. Suburbs with less than four tenancies or four sales not included.