The best places for property investment in New Zealand (2024)

Property investment in New Zealand offers many benefits. These typically include rental income and steady capital growth, among others.

As with any investment, however, property investment in New Zealand also comes with risks. Before committing, you will want to do your own research. That is where we come in.

In this article, we will look at the best places for property investment in New Zealand. We will also look at the keys to good property investment, as well as weigh the benefits and risks. Here is everything you need to know about the best places for property investment in New Zealand.

Where are the best places for property investment in New Zealand?

The best places for property investment in New Zealand are in the main cities. While Aotearoa may boast some of the most beautiful beach towns in the world, centres such as Auckland, Christchurch, Wellington, or Tauranga should be top of mind.

One of the main reasons is that New Zealand’s major centres are, simply put, where the jobs are. For property investment, the cities are also large and stable enough to survive market volatility or other threats. Not only that, but main cities have the proper infrastructure to host investment developments and properties. And they typically offer more services, such as public transport and choices of supermarkets, schools, and shopping places.

Looking for more insights into property investment? Landlords For Kiwi Property Investors offers five tips for successful property investing.

Best places for property investment: the ‘Golden Triangle’

The Golden Triangle is among the best places for property investment in New Zealand. It consists of Auckland, Hamilton, and Tauranga. This relatively safe region is also a great place to get stable returns on your investment.

Christchurch also has an excellent price point. However, the Earthquake Commission (EQC) remains a concern. When it comes to investing there, ensure you have the right insurance advice.

Best places for property investment in New Zealand: checklist

Before making a property investment in New Zealand or anywhere, it is crucial that you create a checklist. This will keep you on the right track when you are making your investment and feeling the strain.

Let’s look at a checklist to help you find the best places for property investment in New Zealand.

Development:

It is a good idea to take stock in the future developments in the area you want to make your property investment in. What about the future developments of the city and the region? You should also conduct research to better understand if/how national and local governments are investing in the area. You may have an option with land.

Infrastructure:

As with the development in the specific region, you should better understand what is being funded to support growth in the area. For instance, what is the distance a prospective tenant needs to travel? How good are the schools in the area? How about public transportation? These are questions you will want to answer when finding the best places for property investment.

Location:

You should also check to see if the property is somewhere you can get the best type of tenant. The reason is you will want to attract renters who can pay rent on time and keep the home in good condition. First, what kind of property are you hoping to rent, an all-year property or seasonal? What are the amenities nearby? Is there a transportation hub like a train station? Are there good schools?

What is key to finding the best places for property investment in New Zealand?

To succeed in property investment in New Zealand, experts say ample planning, preparation and unyielding commitment are required. Here are some of the most important things that investors need to consider before buying an investment property:

1. Reason for investing
2. Where to invest
3. Rental yield
4. Potential for capital growth

Let’s explore each of these considerations in a little more depth.

1. Reason for investing

It is crucial for investors to clearly define their reason for purchasing a property, according to real estate agency Professionals New Zealand.

“Are you interested in holding it for the short term, do you want to wait for capital gains, do you plan to hold on to it for future generations to live in, or want to create positive cashflow to secure your retirement?” the group wrote in a blog post.

The agency added that knowing what they want to achieve would help investors decide which investment strategy to adopt. For instance: what type of property should you buy? And where is the best location?

2. Where to invest

A property’s location has a major impact on the rental demand, tenant quality, and rate of return. If the property is in a high-growth market, rental price, tenant quality, and the property’s value will likewise rise.

“If you are looking at a good investment property, buy in a region or an area where it looks like there is growth starting to happen or is underway,” financial advice company Money Empire New Zealand wrote in a blog post. “Think schools, shopping centres, and good transport, or places where the local council is involved for future growth. It’s helpful to look at any further development plans across the next 10 to 15 years to help your property only increase in value over time.”

Other good indicators of a high-growth location include a large and rising population, vibrant job market, low crime rate, favourable taxes, and affordable insurance rates.

3. Rental yield

Another key factor that investors need to consider before plunging into real estate investment is the property’s potential return, also known as yield. Rental yield is often calculated as an annual percentage based on the property’s cost or market value.

Experts say that properties with high rental yield are best for investors looking to boost their cash flow. Ideally, investors should aim for a gross rental yield of above 5% as this shows stability in the rental income.

4. Potential for capital growth

Experts also caution that rental yield should not be the sole consideration when investing in property. A balance between rental yield and capital growth plays a crucial role in helping investors achieve a sustainable portfolio.

Investors should also be able to generate profit from the property. The most common metric used to determine profit is cash on return because it factors in how the investment property is being financed. A good investment property can make cash on return of about 8% or more, according to experts.

When seeking the best places for property investment in New Zealand, it is important to weigh the benefits—and the risks.

Is New Zealand a good place to invest in property?

New Zealand’s robust real estate market is a good place to invest in property, for both local and international investors. Like any investment, however, investing in property in New Zealand comes with both benefits and risks. In this section, let’s outline the pros and cons.

Best places for property investment in New Zealand: the benefits

First, let’s explore the benefits of property investment in New Zealand.

1. Steady capital growth

One of the biggest reasons to invest in property in New Zealand is the potential for capital growth over the long term.

Property prices in New Zealand have historically show an upward trend. This trend provides investors with a great return on their investment. So what contributes to the overall appreciation of property values? Limited housing supply, population growth, and urbanization are each cited as contributing factors.

2. Rental income

You can generate a consistent rental-income stream by investing in rental properties. Property investors, especially in New Zealand’s major cities, can produce attractive rental yields. This is due to the high demand.

To ensure a steady cashflow, it is best to be selective about property type, location, and target market. Doing so will make property investment an appealing option to generate income.

3. Tax advantages

Property investors have access to several tax advantages in New Zealand. Property management, mortgage interest payments, maintenance, and other related expenses can be claimed as deductions. This reduces the overall tax liability. Additionally, New Zealand doesn’t impose capital gains tax on residential properties—another incentive for long-term investors.

4. Diversification

If you invest in property, you diversify your investment portfolio above and beyond more traditional stocks and bonds. As a tangible asset, property investment acts as a hedge against inflation by offering higher levels of stability. If you diversify your investment holdings, you reduce risk and have the potential to achieve higher overall returns.

Best places for property investment in New Zealand: the risks

Like any investment, there are risks involved. Let’s explore some of the risks involved in property investment in New Zealand.

1. Market volatility

Generally, New Zealand property prices have experienced growth in the long term. However, real estate is subject to fluctuations. Unforeseen events, economic conditions, and changes in government policies are just some of the causes of these fluctuations. This is one of the risks to consider before deciding on property investment.

2. Financing/interest rates

Property investment typically involves a sizeable financial commitment—which includes mortgage loans. Changing interest rates can impact the cost of borrowing, affecting cash flow and therefore overall profitability.

When investing in real estate, you should be aware of fluctuations in interest rates. This awareness will inform any contingency plan you have to tackle possible increases in repayments.

3. Regulatory changes

Remember: government policies and regulations are subject to revision. These regulatory changes can impact strategies and profitability for property investment.

To mitigate potential risks, and to adapt your plans accordingly, it is crucial for you to stay informed. Changes to look out for include tenancy laws, tax reforms, or foreign ownership restrictions.

Best places for property investment in New Zealand: closing thoughts

When considering the best places for property investment in New Zealand, it is important to do your research. It matters where you plan to invest in property. It is also critical to know the keys to successful investing, as well as the pros and cons.

Remember: the more information you have, the better off you will be.

To find out more about the best places for property investment in New Zealand, get in touch with one of the mortgage professionals we highlight in our Best of Mortgage section. Here you will find the top performing mortgage professionals across New Zealand.

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