Capital Gain and Top Rental Returns in The Bay of Plenty

Since our last blog, two more articles have featured in the Bay of Plenty times regarding the current property market trends in the Western Bay of Plenty.  As discussed in previous blogs, the current rental shortage is pushing up rental prices in many areas of Tauranga resulting in fantastic returns for landlords, and the current shortage of housing is also resulting in a capital gains increase for the area.

In the article “Top returns on rental homes in city suburbs” they highlighted the great returns landlords are getting for properties in the Hairini, Welcome Bay and Greerton areas of Tauranga.  These areas are all popular with families and those needing easy access to main commuting routes.  In some of these areas rents have increased nearly 10% because of the rental shortage.

The Westpac Property Investor Report (September 2014) quoted in the article names Tauranga’s top 5 suburbs for gross yield returns as shown in this table:

Suburb Property type Median Weekly Rent Estimated Valuation (2014) Gross Yield
Hairini House (3 Beds) $350 $264,000 6.9%
Tauranga Apt/Flat (2 Beds) $272 $246,000 5.8%
Greerton House (3 Beds) $330 $310,000 5.5%
Mount Maunganui Apt/Flat (2 Beds) $331 $311,000 5.5%
Welcome Bay House (3 Beds) $350 $332,000 5.5%

The article also discussed the capital gains property owners are seeing for many of these areas.  The same Westpac report outlines these top 5 suburbs for capital gains returns:

Suburb Property type Median Weekly Rent Estimated Valuation (2014) Capital Gain
Bethlehem Apt/Flat (3 Beds) $315 $335,000 5.3%
Greerton Apt/Flat (2 Beds) $272 $300,000 4.6%
Otumoetai Apt/Flat (2 Beds) $275 $286,000 3.7%
Mount Maunganui House (3 Beds) $375 $455,000 3.6%
Mount Maunganui Apt/Flat (2 Beds) $331 $311,000 3.6%

The second article Value of Bay properties up in ‘cheaper’ areas focused on the latest QV data which also shows that the average value of properties in Tauranga and the Western Bay has increased in the past 12 months, with some increasing in value by more than 5 per cent.

This article showed Pukehina had the highest increase at 9.3 per cent, followed by Matua, 6.9 per cent, Te Puke, 6.8 per cent, Mount Maunganui, 5.7 per cent, and Greerton 4.3 per cent.

Overall Tauranga was one of the best performers in the latest QV data, with values up 0.8 per cent in the past three months and 5.1 per cent year on year.  As previously discussed, many people form Auckland are taking advantage of the cheaper property prices and better lifestyle in Tauranga and the Bay, driving up demand for all types of housing in these areas.

So now is a fantastic time to invest in a Tauranga rental property. With great returns and a capital gain combined with the services offered by Connect Realty Property Managers, you can enjoy a stress free investment.

If you wish to discuss any of the figures outlined in this blog, or the quoted articles, please call Chris in our office. She would be happy to talk about possible rental returns for your investment property, real estate trends in the Bay and more.