Kelvin Davidson, Senior Property Economist, Corelogic
1 September 2020
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.
The rental property market across the Wairarapa area is dominated by houses, with only a handful of flats (all in Masterton) and no apartments. Of the 229 properties recently on the market in the wider Wairarapa area, 93% have been houses (213), and 7% flats (16). Masterton accounted for 157 of those properties, with 141 houses (90% of Masterton’s stock) and 16 flats.
The remaining 72 properties recently on the market in Wairarapa were either in Carterton or South Wairarapa, and were all houses.
The total absence of apartments in the Wairarapa area is no surprise, given that it’s largely rural and with relatively low population density.
House Size, By Bedroom Count
Looking at houses specifically (213 properties), the Wairarapa rental market has recently been dominated by three-bedroom properties, with no five bedroom houses. There is only a small
handful of one-bedroom houses (a total of six, all in Masterton).
Within the three-bedroom category,119 properties have recently been on the rental market, which is 56% of the house total – it’s typical across most of the country for the rental house segment to be dominated by three-bedroom properties. Most of those 119 have been in Masterton (77), with 42 in Carterton or South Wairarapa.
In the four-bedroom category, which has accounted for 14% of recent houses on the rental market in Wairarapa, 17 have been in Masterton and 13 in Carterton/South Wairarapa. This category accounts for between 10% and 20% of rental houses in each area.
Turning to two-bedroom houses recently on the rental market, there have been 58 across Wairarapa, accounting for 27% of all houses rented. Masterton had 41 of those properties (29% of its rental house segment) and Carterton/South Wairarapa had 17 (24% of its segment).
Rent And Yield
By matching average value to rent we can look at gross yield for three-bedroom houses in each area. Median weekly rents for three bedroom houses in Wairarapa are tightly bunched around the $400 per week mark, or about $380 in Masterton and $420 in Carterton/South Wairarapa.
However, the gap in median values for three-bedroom houses is a little larger, with Masterton’s figure at $446,050 but Carterton/South Wairarapa up at $552,500.
The result is that gross rental yields for three-bedroom houses are higher in Masterton (4.4%) than Carterton/ South Wairarapa (4.0%). However, compared to national average yields of about 3%, properties in both parts of Wairarapa still look pretty good on a yield basis.
In terms of rental growth for three-bedroom houses, Masterton has been subdued over the past year, only seeing a 1.3% rise. By contrast, Carterton/South Wairarapa has fared better, seeing rents increase by a solid 7.1%.