NZ investors on alert as country attempts COVID recovery
It could be an interesting few months in the New Zealand property market, as our neighbours across the ditch continue their path to COVID-19 recovery.
The Real Estate Institute of New Zealand’s chief executive, Bindi Norwell, said, “Looking forward, it will be interesting to see what level of impact COVID-19 has for residential property investors, particularly when you take into account the rental freeze and some tenants’ inability to pay their rent due to job losses.”
On the one hand, the chief executive said, “We’ve got some of the lowest lending rates we’ve ever had, the LVRs have technically been temporarily removed, and lending to investors is up 25.7 per cent year-on-year.”
“But on the flip side, the country is facing significant levels of rising unemployment, and investors are waiting with bated breath to find out whether the 90-day notice will be removed as part of the Residential Tenancies Act changes,” she conceded.
Her comments come as research from the institute revealed strong performances from certain regions up until the end of March – when the country entered a nationwide lockdown.
Across all regions, the Manawatu-Wanganui region was the best performer countrywide in terms of capital gains, which saw a 23.9 per cent improvement year-on-year.
Its annual yields also capped out at 4.3 per cent.
Capital gains in Southland increased by 22 per cent over the first three months of 2020, compared with the same period in 2019 – a median price jump from $287,000 to $350,150.
In addition, yields in the area increased 4.8 per cent year-on-year, with REINZ classifying Southland as “the standout region for residential property investors in New Zealand”.
The West Coast region wasn’t far behind, recording capital gains 17.4 per cent higher than the same time last year.
According to Ms Norwell, “All regions across the country saw a good lift in capital gains for investors – a result of strong median price increases.”
“Again, Southland has proved to be the ‘standout’ region in terms of providing investors with good returns – a trend we’ve seen for a number of months now, mostly the result of low property prices and good rental returns across the region,” she said.
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