Since moving to Dunedin from South Auckland, I’ve never looked back. I’ve enjoyed the Dunedin lifestyle, the natural beauty of the city, and the lack of traffic. On top of being an excellent place to live, Dunedin's also a good area for property investment. The economy is well diversified for the size of the city and there are different types of roles available from construction at the new hospital through to tech.
Here's my top five reasons to look at Dunedin seriously as a destination for residential property investment, even if you don’t live here:
Looking at the interest.co.nz rental yield indicator, Dunedin is the only city with a population above 100,000 which has a median 3 bedroom yield of over 6%. You have to go to Invercargill, Whanganui, or Rotorua to get similar yields. There's nothing wrong with these cities, however they all have much smaller populations and economies.
With a population of around 125,000 across the wider Dunedin area, local infrastructure costs are divided among a large ratepayer base. Even including the ORC rates, the overall percentage of your annual rent that you spend on council rates is reasonable when compared with other smaller cities with similar yields.
Dunedin's economy is well diversified with many different sectors of employment. Yes we are going through a recession at the moment and the number of jobs is well down on 2022, but the variety of employers along with the university means that there's stability. Many smaller cities with similar yields are reliant on one or two large employers. We've unfortunately seen the risks of employment concentration play out in the sawmill closures in Ruapehu which is going to gut some of these smaller towns.
Landlords need good access to services in the city they buy in. Dunedin has a good number of tradesmen and other landlord services in the city. This mean maintenance can be done at a reasonable rate, there are spare parts available for any appliances which break, and we can arrange maintenance in a good timeframe.
Properties with land give you options in the future. Even if your property isn’t immediately subdividable, buying a property with land, instead of a unit or townhouse, means it may have the potential to become subdividable in the future. In the larger centres such as Auckland and Wellington, having a good-sized backyard lets you build secondary dwellings or developments to improve your yield or create equity. However, in these cities, properties with land are expensive and low yielding, which means you’ll have to top these up from your salary or from other cashflow positive investments.
Properties on good sized section in Dunedin can be purchased still for under $500k, and with post-renovation yields above 6%. In comparison,$500k will get you a townhouse, unit or apartment in the main centres with limited value add and future options.
Property investment outside of your own city has traditionally been more logistically difficult. However, with a good team on the ground here, you can overcome a lot of these issues and gain access to better yields. As part of our service, we can arrange a wide range of trades, visit properties on your behalf, and refer you to professional services such as lawyers and building inspectors. Head over to our investor support service page for more information.
