Yields and Opportunities in New Zealand’s Ageing Housing Stock

Unlocking Value in the Provinces

It has been well documented about the slowdown in the real estate market across the country. From the peaks of 2022, we have now seen stagnant property prices for the last three years. Data sourced from Infometrics have shown a decrease in the average house value of just under –12%1. A stagnant real estate market means we are seeing strengthening yields, particularly around the provincial regions. As such residential property investors will likely become more motivated around the yields being offered against the potential for short term capital gain. Some of the provinces of New Zealand are appearing as high-performing regions. With interest rates easing, areas outside the main centres offer compelling yields and untapped opportunities—especially when it comes to older housing stock. 

Rental Yields: Where the Numbers Stack Up

At Property Brokers, we work closely with Digital valuation experts Valocity who have developed a bespoke insight into the rental market. Valocity are able to provide us with an Automated Rental Valuation dashboard so we can assess what is happening within the rental market. We can see how each property we manage performs against its potential income and there is lots of opportunity. The dashboard also reveals that provincial regions are delivering solid gross rental yields. Here's a snapshot: 

Regions like the West Coast (7.36%), Manawatū-Whanganui (5.96%), and Southland (5.71%) perform strongly with yields. The graph below shows how our regions compare in terms of gross yields.  

The Age of Opportunity: Our Housing Stock

Property Brokers manages approximately 8,500 properties across provincial New Zealand and the average of our rental stock exceeds 50 years. While this might seem like a challenge, it’s actually a golden opportunity for investors. 

Older homes often come with lower purchase prices and offer significant potential for value-add strategies. Renovations such as fit outs, insulation upgrades, heating improvements, and layout reconfigurations can transform these properties into warm, healthy homes that command higher rents and deliver strong capital gains. 

Value-Add Strategies for Investors

Here’s how investors can unlock value in the provinces: 

• Understand the market: Do due diligence before you buy and assess what the demand is for rental properties and what type of tenant is going to rent the property. Utilise tools such as Tenancy Services to see how many bonds are being lodged and for what type of property. 

• Buy Smart: Target older homes in high-yield regions with strong rental demand. Again, do your due diligence. Get a expert to assess the condition of the property. If the bones and foundation is strong, you could be able to add significant value to property.  

• Renovate for Return: Focus on upgrades that improve tenant appeal and rental income. Look at the configuration of the property and look at cost effective ways to add value. Ensure you budget and look at the extra rental income to calculate the return on investment. 

• Leverage Local Expertise: Work with Property Brokers’ local teams to identify undervalued opportunities and manage renovations effectively. 

The provincial property market is not just affordable - it’s investable. With strong yields, ageing stock ripe for renewal, and increasing demand, now is the time for investors to act. 

At Property Brokers, we’re here to help you navigate the market, identify high-potential properties, and unlock long-term value. Get in touch with us to get started!

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