Which property type results in the highest yields
Are you looking at increasing your investment portfolio but are not sure which type of property results in the highest yields? We looked at the data to provide you with some comparisons.
- Sales for Auckland and Northland properties in the past 12 months with properties over $2.5 million removed.
- Weekly rental received from B&T managed properties as at 01/09/2018.
Rental incomes have been rising consistently for many years as we've seen a steady 4-5% increase for the past 5 years. However these increases have been outpaced by the greater increase in the residential sales market, resulting in decreased yield.This month we're looking at where the greatest yields can still be achieved, and what types of properties offer these yields.
The tables below provides an overview of the average weekly rental and the average sales price per property type and by number of bedrooms. This information forms the basis of insights around the yield per property type.
Average Weekly Rental
| Property type | Number of bedrooms | Grand Total | ||||
|---|---|---|---|---|---|---|
| 1 | 2 | 3 | 4 | 5+ | ||
| Apartment | $408 | $561 | $741 | $606 | $971 | $517 |
| House | $331 | $450 | $543 | $683 | $840 | $594 |
| Townhouse | $462 | $519 | $622 | $767 | $957 | $633 |
| Flat/Unit | $340 | $439 | $529 | $426 | ||
| Grand Total | $369 | $466 | $555 | $687 | $846 | $558 |
Average Sales Price
| Property type | Number of bedrooms | Grand Total | ||||
|---|---|---|---|---|---|---|
| 1 | 2 | 3 | 4 | 5+ | ||
| Apartment | $488,712 | $705,536 | $1,020,803 | $753,333 | $370,000 | $651,460 |
| House | $560,143 | $775,081 | $887,894 | $1,106,703 | $1,315,327 | $1,027,164 |
| Townhouse | $437,000 | $728,431 | $899,966 | $1,184,557 | $1,347,187 | $932,892 |
| Flat/Unit | $503,079 | $648,044 | $718,790 | $924,125 | $787,500 | $651,426 |
| Grand Total | $496,278 | $708,680 | $886,702 | $1,107,315 | $1,313,033 | $961,553 |
Average Yield on Investment
| Property type | Number of bedrooms | Grand Total | ||||
|---|---|---|---|---|---|---|
| 1 | 2 | 3 | 4 | 5+ | ||
| Apartment | 4.34% | 4.13% | 3.78% | 4.18% | 4.12% | |
| House | 3.07% | 3.02% | 3.18% | 3.21% | 3.32% | 3.01% |
| Townhouse | 5.50% | 3.70% | 3.60% | 3.37% | 3.70% | 3.53% |
| Flat/Unit | 3.52% | 3.53% | 3.83% | 3.27% | 3.40% | |
| Grand Total | 3.87% | 3.42% | 3.25% | 3.23% | 3.35% | 3.02% |
- The average yield is 3.02% across all property types.
- The highest yield overall sitting at 4.12% comes from investment in apartments. This is consistent across the number of bedrooms for apartments with the exception being 1 bedroom townhouses which sits at a 5.5% yield.
- The lowest yield for apartments is 3.78% for 3 bedroom properties. However this is still comparable to the yield from flats/unit which has the highest yield of 3.83%.
- Although the average sale price for a one bedroom house ($560,143) is higher than a one bedroom apartment ($488,712), the average rental for apartments are higher at $407.51 when compared to houses at $331.06.