In early October 2021, it was reported that one of South Taranaki District’s southernmost towns, Waverley, had the cheapest house in New Zealand on the market. The two-bed home was listed for just $89,000. This is less than what many buyers would need for a deposit on a house, proving that the idea of purchasing a house in smaller townships is possible.
As a property investor or prospective investor, your requirements are fairly simple. You need to be able to comfortably purchase a home that is Healthy Homes compliant (or not far off achieving this) in an area where rental demand will ensure a good return. With the Reserve Bank amending LVRs and additional restrictions being implemented to discourage investors from buying homes that first home buyers could acquire, buying an investment property might seem like an impossibility.
While the government is encouraging investors to build instead of buy there are still plenty of opportunities out there for people willing to take the path less trodden. This might mean, for example, buying outside of your region and away from the main cities. In this article, we’ll explore some of Taranaki’s hidden investment gems and how investment properties in these townships are providing great returns.
While many people in Taranaki look to the New Plymouth District for an investment property, it is definitely not your only option. Properties in the city are reaching an average price of $700,000 in October 2021, according to the REINZ property report. Looking further out, and venturing south can yield more affordable properties. The South Taranaki District, for example, is the most affordable, with an average house price of just $443,000. That's a huge $257,000 difference.
So is purchasing a property in the rural townships of Taranaki a smart move, especially for those looking to extend their housing portfolio? Below we break down the rural townships within Taranaki, outlining the current average selling price, year-on-year comparisons as well as known local yields, giving investors an understanding of the rental income potential in each township.
How the average house sale prices have changed
Let’s start by looking at the latest sale prices and how they have changed over the course of three years. In Taranaki as a whole, the median sale price is $535,000, which represents a 23.3% increase from the same period last year. When we compare it to three years ago we are seeing a 50.7% increase, this is a $180,000 difference in price. So what do these rural townships look like? Note: These statistics were supplied to us by REINZ and are accurate as of November 2021.
House prices have continued to increase over the course of the last three years for all townships. We have seen a huge increase in house prices in the townships of Eltham and Patea, where they have climbed over 100% when compared to November 2019. What is interesting to note is that over the past year Patea has seen the highest median house price increase yet Eltham has seen the lowest increase.
How do the rural township rental statistics add up?
When we talk about rental yield, it’s the measure of rental income a property generates against its purchase price. As a whole Taranaki’s rental yield was 4.66%, which makes it the fourth-best region in New Zealand behind Hawkes Bay, which had a yield of 4.72%.
Here’s how some of our regional townships shape up according to Real Estate Investar:
Investing in the smaller townships of Taranaki can also be a favourable route even if you’re wanting a more hands-off management approach. While many investors might be put off by the idea of driving for an hour to attend to a late-night issue, there is a solution that gives peace of mind while reducing stress. So if you’re looking to grow your property portfolio, then looking to invest in the smaller townships in Taranaki is a great place to start. With a number of rural options perfect for farmworkers and their families, or even rural homes for those looking for a lifestyle block to call home there are many options available.
Professional property management ensures your property is regularly inspected, tenants found and issues handled no matter its location. If you’re looking to invest out of town but aren’t keen on travelling to manage your property, then McDonald Real Estate is your perfect partner. With offices all over Taranaki, we can help you find your next rental property and then help you find ideal tenants and manage your investment.
Our professional team of property managers are local experts. They have the insight to assess the likely returns of your next investment and assess local demand for properties like yours. Chances are they already have a list of people looking for exactly the house you’ve bought! If you’re looking for the perfect region-wide partner then McDonald Real Estate is your first stop. There is always an office close by with a friendly face ready to help, so contact us today.