Rolleston – Is it a good place to invest? An honest review

Rolleston is a small – but growing – city, a short 20 minute drive from Christchurch’s city-centre.

Over the last 25 years the population has exploded. 16x more people lived in Rolleston in 2021 compared to 1996.

But is it a good place to invest? And is Rolleston the right choice for your portfolio?

In this article, you’ll learn all about Rolleston – where it is and what sort of investments are available – and whether its the right place for your next investment portfolio.

And if you have a question, write your questions or thoughts in the comments section below.

Where is Rolleston and what’s it like?

Rolleston is a small city 22 kilometres from Christchurch. It’s classed as a satellite town, and is the largest town of Selwyn District, in Canterbury.

And as mentioned the population has risen markedly. The population is 16x larger today than it was 25 years ago (1996 – 2021).

Over the same time, New Zealand’s population as a whole is only 1.4x larger than 25 years ago.

This growth has been fueled (in part) by Rolleston’s location, which makes it the ideal for neighbourhood family living.

The town is close enough to Christchurch that people commute in, but the land is cheap enough that you can purchase a standalone house relatively affordably.

In addition, the rapid population growth means that much of Rolleston’s infrastructure is modern and new.

It’s been kitted out with wider roads, childcare centres, good schools, and motorways to those areas (20 minutes drive from the main city) have been upgraded.

As part of this growth, property developers have built entire new suburbs of new build standalone properties – which have been bought both by investors and owner occupiers.

Its economy is mainly propped up by the dairy and agricultural industry.The primary industries make up 20.5% of Selwyn District’s economy, compared to 6.5% for the country as a whole.

The district is home to several large dairy farms, including Aylesbury Creamery and Lincoln University Dairy Farm.

Is Rolleston a good place to invest?

Rolleston’s population might have grown substantially, but is it a good place to invest?

From our analysis, Rolleston does stack up as an area that is worth considering. Although – like every area – it won’t be the right fit for everyone (more on this below).

Property investor and financial adviser, Toby Pascoe says: “Rolleston is an example of forward thinking development, which has led to the complete gentrification of an area.

With some of the highest population growth for a district in New Zealand, if the property, developer and numbers make sense, then Rolleston itself is a no-brainer.”

Here are some of three key reasons why:

Reason #1 Property cycle

Property prices in Selwyn District (where Rolleston is) are currently 12.4% undervalued, compared to where we would expect it to be.

This suggests that house prices in Rolleston are likely to increase at a faster rate than the rest of the country over the medium term (about 3-7 years).

However – as you can see from the graph – house prices in the district are currently catching up to other parts of the country.

Reason #2 Population growth

We’ve already mentioned the strong population growth Rolleston has experienced in the past.

But, you should note that Statistics NZ expects Selwyn district’s strong population growth to continue.

It’s expected that the population will increase by another 60.47% over the next 30 years (2018 – 2048). That’s faster than Queenstown, Auckland or anywhere else in New Zealand.

That means by 2048 another 40-odd thousand people will call the district home.

This additional population will create additional housing demand, which will support higher rents and can help nudge house prices higher.

Reason #3 GDP growth

Rolleston's economy has exploded over the last 21 years. The economy is 27.6x larger than it was in 2000. Meanwhile the rest of the country is only 1.7x what it was in 2000.

While some of this has been driven by population growth, that’s not the whole story.

While the economy grew 27.6x (2000 – 2021), the population grew 9.8x over the same time frame. While that population growth is astonishingly high, it doesn’t explain the whole increase in the city’s GDP.

The growth in the economy has also been fuelled by the development of infrastructure.

For example, Rolleston is located at the junction between the South Island’s main railway lines. That’s why 92% of Christchurch’s exports pass through Rolleston.

This has attracted the building of Carter Group’s IPORT, a large inland port spread over 122 hectares of industrial land in Rolleston. This major piece of infratructure creates jobs and attracts businesses to the city.

What sort of properties should i buy in Rolleston?

Because families move to Rolleston – away from Christchurch – for a more suburban, family-focussed lifestyle, standalone homes are more popular than townhouses.

And because Rolleston is more affordable (on average), the right new build standalone home will stack up as an investment.

So, if you’re buying in Rolleston, you’ll primarily be considering a family-sized standalone property.

How much will it cost to invest in Rolleston?

A 3 to 4 bedroom standalone property in one of Christchurch’s satellite towns will typically cost $750,000 to $850,000.

Really, the difference in price comes down to the town you’re purchasing in, the building company you go with, and the specification of the property.

Here’s are 3 examples of a properties that Opes is recommending in Rolleston at the time of writing. All are priced between $800 - $850K.

These homes are all 4 bedrooms. As a rule of thumb, these sorts of homes feature a master with ensuite, a walk-in wardrobe, an open plan kitchen-living area and a double garage.

#1 Freedom built – Lot 237 Faringdon

This property is being built by local developer, Freedom Built. The house has 4 bedrooms and 2 bathrooms and is priced at $835,000.

In a normal rental market, this property would be expected to rent for between $650 – $670 per week.

#2 Oakridge homes – Lot 395 Faringdon

This property is being built by local developer, Oakridge Homes. The house has 4 bedrooms and 2 bathrooms and is priced at $839,000.

In a normal rental market, this property would be expected to rent for between $650 – $670 per week.

#3 Oakridge homes – Lot 239 Faringdon

This property is being built by local developer, Oakridge Homes. The house has 4 bedrooms and 2 bathrooms and is priced at $825,000.

In a normal rental market, this property would be expected to rent for between $650 – $670 per week.

What is the Rolleston rental market like?

Rolleston rents have increased at a faster rate than the rest of the country.

According to Infometrics data, Selwyn District’s rents increased by 5.2% per year (2000 - 2022). That compares to 4.5% for the rest of the country.

Property managers also say that the Rolleston rental market is strong.

Linda Forsyth from Venture Management (Opes’ sister company) says: “brand new, 4-bed standalone properties in places like Rolleston – go like hotcakes.

“The rental market is crying out for more of them.”

This is reflected in the area’s rents, which have increased substantially in the past 12 months.

In the 2nd quarter of 2022, rents for 4-bedroom homes were fetching between $600 - $650 in rent a week, according to Forsyth. By her analysis, this is up from the $500 a week those same properties would have fetched a year ago.

According to Linda, increased demand is being driven by a lack of stock in the area as less housing has come to market in the past 6 months, based on what she’s seeing.

It should be noted that currently rents are a bit softer, because we are in the middle of winter. This is a common seasonal blip, because people don’t like to move in the cold and rain.

However, it’s also important to note that even as rents naturally go up and down, the vacancy period of Rolleston homes are more likely to be reduced compared to a townhouse in the middle of Christchurch.

For instance, compare a young family with two kids to a young, single working professional in the city. It is reasonable to assume the latter is more transient as life is less predictable and more flexible.

Linda reckons the longevity of a city apartment is about 12-18 months. But in the suburbs, the length of a family tenancy is much longer.

Should I buy an investment property in Rolleston

If you’re buying in Rolleston, you’re likely buying a new build standalone house. This costs more than buying a 2-bedroom townhouse in Christchurch (for example).

That means that investing in Rolleston tends to be a good fit for investors who can afford to spend a bit more on an investment property.

In addition, if you are a seasoned investor with a lot of 2-bed or 3-bed townhouses in your portfolio, you might consider adding a standalone house in your portfolio to add diversification.

And because standalone homes are considered ‘growth properties’, investing in Rolleston will be a better fit for those investors looking to grow their wealth, rather than who are looking to earn a passive income from these properties today.

As we’ve said earlier, it’s reasonable to think a 4-bedroom standalone property will attract more settled tenants, as opposed to a typical transient tenant in the city centre, a property here could be a good option for an investor who wants the security of tenure.

Don’t buy an investment property in Rolleston if …

On the other hand, if you’re on the hunt for a 2- or 3-bedroom townhouse – then Rolleston will not be the place to invest, right now. There aren’t many being built in the town.

Similarly, if are an emerging investor on a tight budget, then a standalone property might not be affordable for you. In that case, you’ll likely consider a 2-bedroom townhouse in Christchurch City.

Then, once you had a bit more equity under your belt you could set your sights on standalone properties in Christchurch’s satellite towns.

Similarly, if you are looking for a high yielding product to fill out your portfolio, then these 4-bed growth houses, aren’t going to be the right pick for you.

In GRAPHS– is Rolleston a good place to buy an investment property?

This section is for the data nerds. Here are a the key points you need to know to better understand the Rolleston property market and the Rolleston economy.

#1 Property cycle

Based on the data, Selwyn District (where Rolleston is based) is currently 12.4% undervalued, compared to where we would expect it to be.

This suggests house prices in Rolleston are likely to increase at a faster rate than the rest of the country over the medium term (usually 3 to 7 years).

As you can see from the graph, Rolleston house prices are already catching up to other parts of the country.

#2 Capital growth

House prices in Rolleston and the Selwyn district have increased very quickly over the last 30 years. Today house prices in the district are 8.75x what they were at the start of 1992 (1992 – 2022).

#3 Population growth

Today, Rolleston’s population is 16x larger than it was 25 years ago (1996 – 2021). That compares to 1.4x for the country as a whole.

Back then the only 1,550 people called Rolleston home. Today that has grown to 24,670 (2021).

But, you should note that Statistics NZ expects Selwyn district’s strong population growth to continue.

It’s expected that the population will increase by another 60.47% over the next 30 years (2018 – 2048). That’s faster than Queenstown, Auckland or anywhere else in New Zealand.

That means by 2048 another 40-odd thousand people will call the wider district home.

This additional population will create additional housing demand, which will support higher rents and can help nudge house prices higher.

#4 Rents

Over the last 20 years, Selwyn District’s rents have increased 170%, which is higher than the rest of the country, which is sitting at 150%.

Rents in Selwyn District are 2.7x what they were in 2000. But for the rest of the country, that amount is only 2.5x.

This means that Selwyn District rents have increased at a faster rate compared to the rest of the country.

It is likely this has been driven, in part, by the population explosion that has occurred within the city.

# Yields

Selwyn District is not the highest yielding area in the country, but neither is it the lowest.

Out of 67 different councils, it comes in at 42nd, which puts it in the bottom 40%.

It’s not terrible, but it’s not the best on average.

# Affordability

Rolleston and Selwyn District are more affordable than the rest of the country (on average).

The average property in Selwyn District is worth $862,833, compared to $1,016,902 nationwide (Core Logic, June 2022).

This means the average property in Selwyn is 15% cheaper than the average house in New Zealand.

When it comes to affordability, properties in Selwyn District are neither the most expensive, nor the most affordable.

They are the 24th most expensive council in the country, out of 66. This puts it in the middle of the pack.

# GDP Growth

Rolleston's economy has exploded over the last 21 years. The economy is 27.6x larger than it was in 2000. Meanwhile the rest of the country is only 1.7x what it was in 2000.

Most of this has been primarily driven by Rolleston’s population growth, but is also fuelled by the development of infrastructure in the city over that time.

# Employment and unemployment

Unemployment in Selwyn District has consistently been lower than in the rest of the country.

Over the last 20 years, Selwyn's unemployment has been 2.6 percentage points lower than the country at large.

This means there are fewer people searching for jobs, and likely a higher percentage of people working.

# Incomes

Although the population has expanded, which has pushed up GDP, incomes in Selwyn District have not increased at the same pace as the rest of the country.

Across New Zealand the average household income increased 2.4x. Incomes in Selwyn District have increased 1.9x.

The average household income in Selwyn is $100,702, which is 14.5% less than the country as a whole.

But the difference in average household income is not surprising, as the cost of living in Selwyn District is lower than in the major cities, which is reflected in the level of salaries and wages.

# Industry

Selwyn District's economy is driven by agriculture and primary industries.

Some of the top industries include:

• Dairy product manufacturing

• Poultry and livestock farming

• Dairy farming

• Sheep, beef and grain farming

• Horticulture and fruit growing, and agriculture support services.

Together, these make up 22% of Selwyn's economy, compared to just 5% for the whole country.

What this means is there is about 4.4x more agriculture going on in Selwyn District compared to the country at large.

What this means is there is a lot of dairy, agriculture supporting the economy. People living in Rolleston will be either servicing the immediate dairy industry, or will be commuting to the central city.

Write your questions or thoughts in the comments section below.