What is a good yield on rental property in NZ?

As of October 2026, Opes Property typically sources growth properties with a 4% to 5.5% gross yield and 6%+ on yield-focused properties.

What is the 2% rule for properties?

The 2% rule says a property's monthly rent should equal at least 2% of its purchase price. For example, a $600,000 property would need to rent for $12,000 a month to meet the rule. That's extremely high by New Zealand standards, so don't use the 2% rule when assessing investment properties.

What is the difference between growth and yield?

A growth property focuses on building wealth through the house going up in value. But it usually has a lower rental yield. A yield property focuses on generating more rental income and cashflow. But, they usually don’t go up in value as fast.

Is 3.5% a good rental yield?

A 3.5% rental yield is low. And in October 2026, Opes Partners does not recommend properties with a yield below 4%.

Property Types

6 min read10 Nov 2026

Growth vs yield properties: Can you have both in 2027?

In this article you’ll learn what the differences are between property types, how to spot them, and how to work out which direction works better for you and your portfolio.

Author: Nefe Marson

Financial adviser at Opes. Formerly a senior adviser at one of NZ largest investment firms. Owned 3 properties by 30.

Book your session with Nefe

Reviewed by: Ed McKnight

Resident Economist, with a GradDipEcon and over five years at Opes Partners, is a trusted contributor to NZ Property Investor, Informed Investor, Stuff, Business Desk, and OneRoof.

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Property investment comes with a trade-off:

A growth property generally increases in value faster, but usually comes with a lower rental yield.
A yield property is the opposite. It gives you more rent and better cashflow, but usually less capital growth.

Put simply: more growth usually means less yield. More yield usually means less growth.

So, which one should you invest in?

Both can play a role in your property portfolio. But the right choice depends on your goals and where you are in your investment journey.

Here are the main differences:

	Growth property	Yield property
Main goal	Build wealth through the house going up in value	Generate more income through rent
Capital growth	Higher	Lower
Rental yield	Lower	Higher
Cashflow	Often requires a larger top-up	Usually requires a smaller top-up
Typical property	House or townhouse	Dual-key or other high-yield property
Often suits	Investors building wealth	Investors who need more cashflow

In this article, you'll learn how these differences play out in the numbers, and how to decide which type suits you.

Key takeaways

Growth properties aim for stronger capital growth but usually have lower yields. Yield properties aim for stronger cashflow but usually have lower capital growth.
As of October 2026, Opes Partners typically assumes that growth properties will appreciate at 5 – 6% growth a year. And that yield properties appreciate at 3 – 4% per year.
Over the long term, growth properties tend to make more money that yield properties.

What is a growth property?

Growth properties tend to be houses and townhouses in a good area or neighbourhood.

Often, they're the sort of homes that owner-occupiers want to live in.

That part is important. Because, when you eventually sell, you're not just relying on investors to buy your property. You're also appealing to people looking for somewhere to live.

This can mean more potential buyers and stronger demand for your property.

And over time, that demand can help push property values higher.

Here's an example of what would be considered a growth property:

What is a yield property?

A yield property tends to earn more rent for its purchase price. But, they don’t go up in value as fast.

A dual-key property is a good example of a yield property.

That's where you have two separate living spaces within one property. Each can be rented to a different tenant.

That means you can earn rent from two tenants rather than one.

This can make the property attractive to investors who want more rental income.

But it may be less attractive to families looking for a home to live in.

That's one reason why yield properties don’t tend to go up in value as fast.

Here's an example of what would be considered a yield property:

More from Opes:

The ultimate guide to capital growth (Article)
Growth vs yield (Video)
The Golden Goose strategy - How to use property to build a passive income (Article)

Growth vs yield: Which property can build more wealth?

Growth properties have the potential to build more wealth over time. But there’s a catch.

They usually require more money from you along the way.

That's because growth properties often start out negatively geared. The rent doesn't cover all the costs, so you need to top up the difference.

Here’s an example of how growth vs yield stack up over 15 years:

Assumptions: 5.25% interest rate. 100% borrowing. interest-only lending with no debt paid down. rents increase 4% a year. low end of rental appraisals used. high end of estimated operating costs used. Figures are not adjusted for inflation.
	Yield property	Growth property
Original value	$719,000	$729,000
Gross yield	6.7%	4.4%
Capital growth rate	3%	5%
Starting cashflow	-$211/week	-$383/week
How long negative cashflow lasts	8 years	15+ years
Cashflow invested over 15 years	$36,172	$141,817
Wealth built after 15 years (capital growth – cashflow)	$365,007	$644,722

In this example, the growth property builds $279,715 more wealth over 15 years. That’s after accounting for the bigger top-ups.

But there's a catch.

You also need to put in an extra $105,645 to cover the property's costs along the way.

That's the trade-off.

The yield property costs less to hold and becomes cashflow positive sooner. The growth property requires more money from you. But it can build substantially more wealth.

Neither is automatically the better investment. It depends on whether you're trying to build wealth over time or earn more rental income along the way.

Which type of property should I get for my strategy?

The type of property you choose depends on your stage in life.

There are two stages in property investment.

Stage #1 – You're growing your wealth.

These investors are focused on building wealth.

They’re often 10 to 25 years away from retirement or needing a passive income.

Growth properties often suit investors at this stage.

Why? Working professionals aren't concerned about creating a passive income immediately. They already earn an income.

Instead, they want to build wealth for the future. And, they can afford to wait out the time it takes for houses to slowly increase in value.

Stage #2 – Living off your portfolio

Once you retire, you’ve already built your wealth. And your primary concern is cashflow.

Yield properties often suit people at this stage in life.

Why? These people don’t have cashflow coming from their job. So now they want to get a return from their wealth.

Often, at this stage, they'll buy a yield property without a mortgage (or a very low mortgage). They then live off the property’s rental income.

Here's how the numbers tend to look when you buy a yield property without a mortgage:

Property	Yield
Purchase	$600,000
Mortgage	$0
Rent	$36,000
Operating Costs	$12,000
Pre-tax cashflow	$24,000 ($462 / week before tax)

Once an investor can buy yield properties without a mortgage, the cashflow starts to look more attractive.

In this example, owning 2 to 4 mortgage-free yield properties could provide $48,000 to $96,000 a year in cashflow before tax.

However, investors need to build their wealth before moving on to this second stage.

That's why some investors start with growth properties, then move towards yield properties as retirement gets closer.

How much money should my property make?

As of October 2026, at Opes Partners we assume that growth properties will grow in value at 5% to 6% a year. This is as a long-term average. Not a guarantee that this is the grow you will actually get every year.

And we typically recommend growth properties that have a gross yield between 4 – 5.5%.

For yield properties, it’s usually 6%+ gross yield. And we assume that yield properties grow at 3 – 4% per year (as a long-term average).

Our sister-company, Opes Property works with developers to source properties. As at October 2026, these are the types of numbers they tend to use:

Type	Growth vs Yield	Price	Target yield	Target capital growth	Locations
House	Growth	$680,000– $900,000	4% - 4.8%	5%	Canterbury, Kaiapoi, Rolleston, Lincoln, Rangiora, Marshland
Townhouse	Growth	$525,000 - $1.25 million	4% - 5.5%	5% - 6%	Auckland, Christchurch, Hamilton, Queenstown, Wanaka
Dual-key townhouse	Yield	$720,000– $1 million	6%+	3% - 4%	Auckland, Queenstown, Wellington

Gross rental yields are based on a property's price and expected rental income. Capital growth rates are forecasts of what a property might achieve in the future.

Just remember, they're assumptions, not guarantees. Your actual return will vary.

How do I get both growth and yield?

Property investing comes with trade offs. You often can’t achieve both strong capital growth and a really high yield.

If you try to go after both, you could end up in the middle with a property that doesn't do either particularly well.

Can you have it both ways? Yes. Just not necessarily from the same property.

Your portfolio can have both growth and yield properties. One property might focus on building wealth, while another provides stronger cashflow.

So, rather than asking “How do I get both?”, ask: “What does my portfolio need right now?”

If you're building wealth, that may be growth. If you're preparing to live off your portfolio, that may be yield.

The right property isn't the one that does everything. It's the one that does the job your portfolio needs it to do.

Not sure whether growth or yield is right for you? Take the quiz and find out.

Answer a few questions - and we'll tell you whether you should invest in growth or yield properties.

Take the quiz

Nefe Marson

Financial adviser at Opes. Formerly a senior adviser at one of NZ largest investment firms. Owned 3 properties by 30.

Nefe is a Registered Financial Adviser at Opes Partners with 7 years’ experience in financial services. Before joining Opes, she was a senior adviser at one of New Zealand’s largest investment firms, managing $13 million in KiwiSaver and managed funds. She’s helped clients invest over $26 million in property and owned 3 properties before her 30th birthday.

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Ok, now for the legal bit:

This article is for your general information. It’s not financial advice. See here for details about our Financial Advice Provider Disclosure. So Opes isn’t telling you what to do with your own money.

We’ve made every effort to make sure the information is accurate. But we occasionally get the odd fact wrong. Make sure you do your own research or talk to a financial adviser before making any investment decisions.

You might like to use us or another financial adviser

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