Hamilton's housing hotspots have been unveiled today in the inaugural Westpac Property Investor Report, with Melville taking top honours across the country for best rental yields in apartments.
The report compares suburbs by annual rental yield and likely capital gain, before tax is deducted, in three-bedroom houses and in apartments. The numbers are an average from the past three years.
A property's yield is the income the landlord receives in a year as a percentage of the total cost of the property.
Melville, Pukete and Glenview feature in Hamilton's top 10 for both capital gain and yield. Melville delivers an average 5.5 per cent yield and 4.3 per cent capital gain. Its apartments provide a nation-beating 7.5 per cent yield.
Pukete collects a 5.4 per cent yield and 3.8 per cent capital gain for houses, with Glenview at 5.4 per cent for yield and 3.7 per cent capital gain.
Claudelands and Rototuna offer the best capital gains in the city, offering 4.8 per cent and 4.4 per cent respectively. Meanwhile, Enderley and Maeroa take out the yields category with 6.5 per cent and 6.1 per cent respectively.
Westpac general manager of retail Ian Blair said Hamilton had a good mix of rental and capital gains opportunities for investors.
"The benefit of that is that it gives investors choice," he said.
Melville was an attention-grabber for the city when it came to national competition for apartment yields, he said.
"Melville is certainly the standout.
"It is close to the city, close to schools in the area, close to the hospital . . . there are some pretty obvious reasons why Melville stands out and is providing some good yields as well as a good capital gain."
Mr Blair said affordability was Hamilton's other advantage.
"You've still got good affordability in these suburbs where you can get a good yield or, for that matter, you can get in and get a decent capital gain."
Waikato Property Investors Association president Nancy Caiger has been involved in the New Zealand property market for 20 years, and has seen three market cycles. She said the report's hotspots were not surprising.
Glenview was popular for its access to amenities, Pukeke for its location on the western side of the river where most jobs are, Claudelands for its "leafy" streets and heritage feel, and Rototuna for its warm, modern housing which tended to attract migrants from warmer climates, she said.
Ms Caiger said Hamilton's housing market was just kicking off an upward trend. "Already we're seeing some people from Auckland saying: why do I want to buy a house in Auckland for $600,000 when I can buy two properties in Hamilton for that price and get a better yield?
"I think we are in a good position right now . . . There's a nice, vibrant pulse going on in Hamilton right now."
She said investors thinking about buying would need to take careful stock of their circumstances before deciding which purchase suited their needs.
"If you were a new investor just starting out, you would probably have to think about the serviceability of your loan. Therefore you probably would need to look at properties that had a higher yield to help you with your costs.
"If you pay off a couple of your loans, then you might be in a better position to look at properties with a higher growth in their value."
Her top tip for picking the next property hotspot in the city was for investors to "keep their eyes and ears open".
"I would be saying what is happening in the city? Where are developers going? What is the council doing in terms of infrastructure?
Her pick for Hamilton's up and coming suburb was Ruakura, should the $3 billion Tainui Group Holdings inland port get the go-ahead.
"If I were a young investor starting out, I would certainly pay a lot of attention to that because that's going to attract a lot of employment, and so that's going to attract people who will need to be housed," she said.
"I would be making myself very familiar with what it is they are building, where they are building it, where people will need to live in relation to that, and what the roading situation [is]."
The report also looks at yields and capital gains in six other centres: Dunedin, Auckland, Christchurch, Wellington, Tauranga and Palmerston North.
- Waikato Times