Three-bedroom houses in Glen Innes giving an annual capital gain of 18.9%, followed by New Windsor.
Auckland landlords are making more capital gains off their rental properties than those elsewhere, a trend predicted to speed up in the next few years.
The Westpac Investment Report out today showed Auckland dominated the country in terms of returns for landlords through capital gains on their apartments and houses.
The report said three-bedroom houses produced the best returns in terms of yields, calculated by dividing median annual rent by the estimated value of houses in that suburb.
Based on that yardstick, the annual yield on an Auckland house or apartment ranges from 14.4 per cent to just under 19 per cent. The returns compare favourably with the interest rates banks are paying on term deposits of only a few per cent annually.
Westpac said investors or landlords were getting the country's top return on three-bedroom houses from Auckland's Glen Innes, giving an annual capital gain of 18.9 per cent annually, calculated based on the property's increase in worth.
That is followed by Auckland's New Windsor giving 17.2 per cent, then Hornby in Christchurch at 14 per cent.
If returns are measured by gross yields, Dunedin's Forbury tops the country, returning 8.3 per cent followed by South Dunedin at 8.2 per cent.
Grant Porteous of G.J. Gardner said high immigration numbers, high demand and Auckland's constrained boundaries meant the city's rental fortunes would continue.
Porteous said the housing cycle tended to be a seven-year term, so based on historical trends, the big growth would continue for about the next five years.
Ian Blair, Westpac's general manager of retail, said today's report would help guide investors to look in the suburbs with the best returns, whether they were after sheer capital gain or yield. "Capital gain can be a shorter term prospect while yield is more commonly a long-term play. Deciding on that then flows into the type of property and location to target," Blair said.
Census figures made public this month showed more New Zealanders aged over 15 now live in a rental property than people who own their own place. "In 2013, 49.8 per cent of people aged 15 years and over owned or partly owned the home they lived in, compared with 53.2 per cent in 2006," said Census general manager Gareth Meech.
Rental data out this month from Auckland's Crockers Real Estate shows rents were rising and falling across the city, depending on demand in different areas.
Alan Johnson, Salvation Army social policy analyst, has studied the housing sector and found a growing demand for more assistance from a rapidly burgeoning number of retiring baby boomers unable to gain home ownership.