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Regional Review: South Wellington

CoreLogic Nick Goodall, Senior Research Analyst

By: Nick Goodall

1 March 2016

Market Compostion

The rental market in South Wellington varies by area, with Kingston/Happy Valley exclusively houses and Mt Cook made up of predominantly apartments and less than 20% houses.

Brooklyn, Hataitai, Island Bay/Melrose and Miramar/Strathmore are all mostly houses but also a good proportion of flats, while Kilbirnie/Lyall Bay has the largest percentage of flats (65%), with houses making up the difference here.

Other than Mt Cook, Vogeltown/Berhampore/Newtown is the only other area with bonds lodged for apartments (17%) – the rest of the market here is relatively evenly split between houses and flats.

Across South Wellington, for houses, three bedrooms are the most common size. In Kingston/Happy Valley it is exclusively so, although this is off a low sample of only 10 bonds.

Brooklyn and Kilbirnie/Lyall Bay also has less than 20 bonds lodged – Brooklyn with only two and three bedroom houses and Kilbirnie/Lyall Bay with only three and four bedrooms.

Elsewhere the make-up is mixed between two, three and four bedroom houses except for in Vogeltown/Berhampore/Newtown which is the only area to have bonds lodged for five bedroom houses.

Rent And Yield

There is less than $100 difference between the areas in terms of median rent charged across South Wellington. Kingston/Happy Valley is the most affordable at $475, while Hataitai boasts the highest median rent figure of $572.

Median value is well aligned to median rent with Hataitai also having the highest median value for three bedroom houses, at $654,950 and Kingston/Happy Valley the lowest at $522,950. This is more than $50k below the next lowest – Vogeltown/Berhampore/Newtown.

With rents and values tied closely together in the region, gross yield is very similar across each of the areas – roughly mid-4% region wide. Vogeltown/Berhampore/Newtown with a relatively large median rent of $530 offers the greatest yield of 4.8%, while Island Bay/Melrose provides a less appealing 4.2% due to a more conservative median rent of $ 500.

This rental figure in Island Bay/Melrose has dropped 7.4% over the last year – the worst performing area of the eight profiled. Kilbirnie/Lyall Bay and, to a lesser extent, Mt Cook have also seen a drop in median rent over the last year, while both Brooklyn and neighbouring Vogeltown/Berhampore/Newtown have remained flat.

Further south in Kingston/Happy Valley rental growth of 5.1% has been solid.

Rental data is sourced from the Ministry of Building Innovation and Employment (formerly the Department of Building and Housing) based on rental bonds lodged. This rental 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 house 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 house value calculated using our E-Valuer.

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