Homebuyers rent in Auckland but buy outside city
Would-be first home buyers are renting in Auckland, but opting to buy investment properties on the city's outskirts or beyond which are more in their price range.
NZ Property Investors Federation executive officer Andrew King said buying a cheaper rental was a growing trend. It made financial sense as people weighed up their current rent compared to what they would be paying on a mortgage for a property.
"It's a good strategy for people to have the lifestyle they want and still get into the property market. The yields around Ponsonby and Mt Eden and places like that are really quite low and it does make sense to rent there and buy a property to rent out, which can sometimes have double the rental yield as the inner-city ones."
Central Auckland properties offered an average 3 per cent yield and, according to the latest Quotable Value figures, were priced between $600,000 and $1.5 million. Auckland suburbs such as Glenfield, Ranui, Henderson, Glen Eden, Otahuhu, Papatoetoe, Manukau, Manurewa and Papakura were more affordable if people chose to manage the properties themselves, otherwise Hamilton, Rotorua and Whangarei were also options for people looking around the $300,000 to $400,000 mark.
Jeremy O'Rourke, managing director of Hamilton-based real estate agency Lodge, said his company was seeing a lot of interest from Aucklanders looking to Hamilton for investment properties because it offered a better yield. More capital gains were expected as prices were not as inflated as in Auckland.
Harcourts Hamilton director Brian King said there had been increased interest from Auckland investors in the past six months with the agency also receiving strong inquiries online. There were always Aucklanders at its auctions when suitable rental properties were going under the hammer. "As Auckland overheats it makes Hamilton look more affordable."
Auckland operations manager Stephanie Parkinson said there was no way she could afford to buy the $1.6 million Grey Lynn rental she lives in so followed advice to invest in a cheaper property which would quickly increase in value.
This led her to buying a four-bedroom, two-bathroom house and land package in Pokeno for $435,000, which once completed will rent for about $450 per week and which she hopes will be a stepping stone to buying a house in Auckland to live in.
"There's no way I can afford to purchase the kind of home I'm currently living in. It's so far out of my reach, it's not feasible."
Real Estate Institute of New Zealand chief executive Helen O'Sullivan said it made sense for people to buy where they could afford especially if they were content in a flatting situation in the central city. "You are far better to buy where you can afford than trying to afford where you want to live."