Overall, Canterbury and Christchurch yields tend to be higher than Auckland, but lower than some other parts of the country. 

But the “right” yield also depends on the type of property you’re buying.

A 4.5% gross yield is good for a growth property, like a townhouse. But a 5% gross yield would be bad for a yield property.

For standalone houses in places like Rolleston and Kaiapoi (Selwyn and Waimakariri District) we aim for a gross yield between 4.3-4.6%.

Where do these numbers come from?

To get the estimated yield property investors are willing to accept we gather data from Trade Me and OneRoof.

The Trade Me listings show how much rent investors are currently advertising. We then match that rental information with OneRoof data to see how much those properties are worth. 

This shows us the gross yield property investors are actually willing to accept. We then did this for every property on Trade Me.

For instance, here is a property available for rent at the time we completed the analysis:

It’s a 3-bed New Build townhouse in Wellington, and it’s available to rent for $800 a week.

Then, we cross-referenced this with OneRoof’s estimated valuation.

And in this instance, this property is estimated to be worth $920,000, giving it a gross yield of 4.52%. Bang on average for the country.

We then use a computer to do this over 7,000 times. After cleaning up the data, we’ve now got figures no-one else has.

More from Opes:

• What's a good gross yield in Auckland? (Article)
• What's a good gross yield in New Zealand? (Article)
• What's a good gross yield in Wellington? (Article)

Why are these numbers so low?

If you follow a lot of property investors on social media, you might think: “Why are these numbers so low? The numbers some investors talk about online are higher.”

Some investors calculate their gross yield using the price they paid 10 years ago, not what that property is worth today.

When you calculate the gross yield you should always use the value of the property today.

What you spent isn’t relevant. What matters is the yield you are getting based on what the asset is worth today. That’s because if your house has increased in value you could always sell your property and do something else with the money.

Are gross yields going up or down?

Christchurch yields have been steadily declining. In 1993, they were about 7.17%; today they are closer to 4.06%. 

This graph uses a different data set, which is why the number is different from the above. 

The reason yields have declined is that property prices have risen faster than rents. Historically, house prices have gone up by around 6% per year. At the same time, rents have increased by about 4-5% per year.

This is important. Sometimes property investors read investment books that are decades old. The specific yields mentioned in a 30-year-old book won’t be relevant today.

What was a realistic yield 5 years ago may be unachievable in today’s market.

How should you use this data?

This data isn’t here to give you a yes-or-no answer on whether to buy a specific property or not. It’s here to help you ask better questions.

Property is a direct form of investment. You’re not buying a whole city or region… you’re buying one specific property. And that property’s rental return will depend on its price, rent, condition and tenant demand.

So when you’re using gross yield to assess opportunities, compare the yield to that region’s range, not a national rule of thumb.

Use gross yield to screen deals, not approve them. Then move on to net yield and cashflow for a fuller picture.

Other tools you can use

If you’re signed up with Opes+ you can track gross yield directly on the platform. Just head to My Properties to see the gross yield for properties you own, or ones you’re considering.