- South Island investors are buying properties in Greymouth, Hokitika, Westport and Reefton for high rental yields.
- Properties under $300,000 are attracting interest due to affordability and potential returns of 7% to 8%.
- The West Coast’s low house prices and strong rental market make it appealing for investors.
A deceased estate for sale in Runanga for $235,000 is attracting a lot of heat from out-of-town buyers.
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Harcourts West Coast business owner Kevin O’Donnell told OneRoof he had been inundated with calls since listing the three-bedroom home at 8 South Street.
Nine people turned up to the first open home, including three property investors from Canterbury and a buyer from Nelson.
O’Donnell said properties priced under $300,000 didn’t last long on the market. “They come up, and when they do, you have an absolute plethora of people coming in at you.”
The South Street property needs some work to bring it up to Healthy Homes standard. Photo / Supplied
O’Donnell estimated a buyer would need to spend around $20,000 to bring 8 South Street up to standard, but it was still a good deal.
“If you are spending $255,000 in total and you are getting a $350 a week return, well, that’s a no-brainer. These are the kinds of properties that people are looking for,” he told OneRoof.
Other West Coast agents have noticed an uptick in interest from out-of-town investors, telling OneRoof that buyers are targeting cheaper properties in Greymouth, Hokitika, and Westport because of the high rental yields.
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One Agency agent Nicole Pamment told OneRoof that Canterbury investors appeared to be the next wave of buyers heading to the West Coast.
“I believe it’s because the coast is still affordable. For $300,000, you can still pick up a really good investment property in good condition. I think that’s why we are seeing people from all around New Zealand coming, because of the affordability and the lifestyle.”
GV Financial Services director and financial adviser Gareth Veale told OneRoof he had just purchased a second rental property in Greymouth.
He said there were not many places left in New Zealand where you could buy something in the $200,000s and rent it out for $400.
Nelson man Jack Waugh bought this "solid" investment property in Reefton for $300,000. Photo / Supplied
A three-bedroom home on Murray Street, in Greymouth, has an asking price of $269,000. Photo / Supplied
“Those coast properties, yes, they might be a little worse for wear, but the rental market is quite strong, so often whatever you are purchasing is wiping its face. You can’t find that anywhere else in the country.”
Oamaru and Waimate were also popular with Canterbury investors, he said. “These are areas where there is high-rental demand, but the purchase price is low.”
Among the new investors hitting the West Coast is Nelson buyer Jack Waugh. He just purchased his first investment property in Reefton for $300,000.
He told OneRoof that while the roof needed replacing and the piles needed some work, the house was solid and offered a much better rental return than what he could get in Nelson.
Opes Partners resident economist Ed McKnight urged investors to weigh up all their costs before buying. Photo / Fiona Goodall
“When we heard about the new mines opening and the buzz around the West Coast, we thought it’s now or never.”
Greg Daly Real Estate agent Deedee Daly said she had several properties on her books in Greymouth priced in the lower end, including a three-bedroom house at 12 Murray Street for sale for $269,000, and a three-bedroom house on a 1012sqm section at 22 Doyle Street for sale for $295,000.
Daly said that while she had noticed some investors and flippers in the market, her biggest clients were first-home buyers, people relocating to the region for work, and hospital workers who were unable to find a rental property.
Opes Partners resident economist Ed McKnight said West Coast was one of the highest-yielding parts of the country, largely because house prices there were “exceptionally low”.
The median sale price for the West Coast in April was $330,000, which he pointed out was extremely attractive for people living in Auckland or even Canterbury, where prices were double if not triple.
“In terms [of] gross yields, it’s definitely the cheaper properties that tend to do better.”
McKnight also encouraged investors to look beyond the price tag and assess all their costs, including rates, before taking the plunge.
“The average rent might be $400, but if your rates bill is $2500-$3000, you just want to make sure it doesn’t just stack up against the purchase price but all of your costs.”
- Click here to find more properties for sale on West Coast
