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Corelogic Auckland Central

Kelvin Davidson, Chief Property Economist, Corelogic

By: KELVIN DAVIDSON

1 August 2021

The Data

Rental data is sourced from the Ministry of Business, Innovation and Employment based on rental bonds lodged. This data is supplied to us grouped into geographic areas based on statistical area units used by Statistics NZ for the census and as a result do not always match well with common usage suburb names.

The rental data for each area is matched to property price information from our database to determine property prices and therefore yield. The yield is calculated as the annualised rental income divided by the median property value calculated using our E-Valuer.

Market Composition

Central Auckland’s rental market is almost exclusively comprised of apartments, although if you include an area such as Parnell, you start to introduce a few houses and flats. Of the 1,683 properties recently on the rental market, 1,638 (97%) have been apartments, with a handful of flats (18) and houses (27) in Parnell. Of course,

Central Auckland is well-known for being an “apartment market”, so there are no surprises with these figures on market composition. Central West has been the largest market lately for rental apartments, with 642 recently available, followed by Central East (579). Harbourside has also had a reasonable number of apartments available for rent (177), as well as Newton/ Grafton (150), with Eden Terrace and Parnell smaller markets (57 and 33 respectively).

Apartment Size, By Bedroom Count

Looking specifically at apartments, 51% of properties (834) recently on the rental market across Central Auckland have had one bedroom, with another 45% (729) in the two-bedroom bracket. The remaining 4% have been larger, at three bedrooms.

Central East (357) and Central West (300) have had the most one-bedroom apartments recently on the rental market, followed by Harbourside and Newton/ Grafton.

By concentration, Central East is the strongest one-bedroom market, with 62% of recent apartment rentals in that bracket – the rest of the areas are between 40-50%.

The flipside is that Central East has a lower share of its apartment rental market in the two-bedroom bracket (35%), with Eden Terrace standing out here (58% in the two-bedroom bracket), and Harbourside also a touch above 50% in the two-bedroom bracket. Central West has been the largest market for twobedroom apartments, with 315 recently available for rent.

Rent And Yield

By matching average value to rent we can look at gross yield for one-bedroom apartments in each area.

Median weekly rents for one-bedroom apartments across Central Auckland vary quite significantly, from less than $400 in Central East, Newton/Grafton, and Central West, up to closer to $450 in Eden Terrace, and more than $500 in Parnell and Harbourside. There is also considerable variation in the median value for one-bedroom apartments, ranging from $403,950 in Central East, up to $552,900 in Eden Terrace. In turn, that means yields also differ, with a low of 4.1% for one-bedroom apartments in Eden Terrace, between 4.5% and 5% for Newton/Grafton, Central West, Parnell, and Central East, up to 5.3% in Harbourside.

Measured against standard rental properties (ie three-bedroom houses) in other parts of the country, yields of 4.5% or more in Central Auckland are comparatively high.

However, those higher yields have been “necessary” in recent times to help compensate for sluggish rental growth. Indeed, of these six areas, onebedroom apartments have only seen rental increases over the past year in one market (Eden Terrace) – rents have dropped everywhere else.

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