What do you see? Generally, properties located in the CBD have higher gross yields.
As properties move away from the inner city, yields fall sharply. They then gradually increase again as properties move further out of town.
This trend is also seen in the Auckland, Christchurch and Hamilton property markets.
Why does that happen?
Properties in the centre of a city tend to be cheaper. They’re compact, and you’ll find more apartments and townhouses.
Even though they’re smaller, these properties get a good amount of rent.
Suburbs on the CBD’s perimeter tend to be more expensive. Those properties tend to be bigger and aren’t affordable for the average renter.
Most people who have the money to live in expensive suburbs can afford to buy their own home, so there is less tenant demand, which means softer rents.
Think Parnell in Auckland, Fendalton in Christchurch, or River Road in Hamilton. That’s why these suburbs have lower yields.
As properties move further out of town, yields pick up.