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Property prices have skyrocketed throughout New Zealand. The last time the median house price was under $500,000 was back in February, 2017. That was seven years ago.

Today, the median house price is $760,000. That figure climbs to just under $1 million if you live in Auckland.

Thankfully, there are 17 council districts where you can still snag a house for less than $500,000.

These areas are mainly in Waikato, Manawatu-Whanganui, Taranaki and the South Island.

Let’s count down the top 5 places to invest where house prices are below $500k.

#5 – Tokoroa

With a population of a little over 13,500, the median price of a property in Tokoroa (South Waikato District) is still only $388,000.

It's not bad, given that Tokoroa is in a handy location that isn’t too far from many larger cities. You can get to either Hamilton, Tauranga, Rotorua or Taupo in about an hour.

The area has many big businesses: the Kinleith Mill and Fonterra’s Lichfield site up the road. Plus, OFI – a global dairy manufacturer – opened a new plant last year.

That provides job opportunities for tenants and has the potential to bring more renters to the area.

Investors in Tokoroa can also get a decent rental yield. This is a common figure used by property investors to analyse properties. Gross yields measure the rent you get compared to a property’s value.

The median rent in the South Waikato district is $450 a week. That means the average property could earn $23,400 a year.

Divide that by the median house price of $388,000, and you’ll see that you could easily get a gross yield of 6% in Tokoroa.

That’s well above the average for the country.

#4 – Hawera

Over in South Taranaki, Hawera can also be worth a look. In this small town of 10,000 you can still buy a house for $415,000.

Like Tokoroa, Hawera is a dairy town. One of Fonterra’s largest factories is 5 minutes from the edge of town. The site at Whareroa employs 1,000 people, and dairy employs over 1 in 4 workers.

The median rental property earns $500 a week. That suggests an average gross yield of 6.3%.

The downside of Hawera is that it has a small population. Many investors prefer to invest in larger cities. The larger the city, the more tenants you have. That can make it quicker to find a tenant.

House prices also tend to go up more consistently in areas with larger populations. On the other hand, house prices in smaller towns tend to be more volatile and can be flat for a long time.

But if you want a more affordable option, Hawera could be worth a look.

#3 – Greymouth

The country’s lowest house prices are often found on the West Coast of the South Island.

The median house price in Greymouth is a low $340,000. That is just over a third of Auckland’s median house price.

Yet the average rent in Greymouth is healthy, at $408 a week.

But like other areas on this list, the population is small. Only 8,000 live in Greymouth, and Stats NZ projects that the town’s population will shrink over the next 25 years.

Over time, that could mean more houses are looking for fewer tenants.

#2 – Invercargill

If you prefer to invest in larger cities, then the South Island has options. House prices tend to be low even in areas with large populations.

57,000 people live in Invercargill, yet its median house price is just $470,000.

Because more people live in Invercargill, the economy is more diverse.

Many workers rely on the dairy industry in places like Hawera or Tokoroa. If the dairy industry experiences a downturn, those towns can suffer. In a larger city like Invercargill, that is less of a risk.

Together, these factors have made Invercargill a popular option for property investors. Some investors can buy two or more properties in Invercargill for the same price as one in Auckland.

#1 – Ashburton

Ashburton takes out the top spot. It is an hour’s drive from Christchurch, our country’s second-largest city.

Unlike other towns on this list, Ashburton is both near a major city and has a sizeable population. 35,000 people call the town home.

What’s more, Ashburton house prices appear to be about 4% below where I’d expect them to be.

The median house price is $498,500, according to the latest data released in February. So, in a year, Ashburton may no longer be eligible for the top spot on this list.

Opes Partners
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Ed McKnight

Our 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.

Ed, our Resident Economist, is equipped with a GradDipEcon, a GradCertStratMgmt, BMus, and over five years of experience as Opes Partners' economist. His expertise in economics has led him to contribute articles to reputable publications like NZ Property Investor, Informed Investor, OneRoof, Stuff, and Business Desk. You might have also seen him share his insights on television programs such as The Project and Breakfast.

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