Auckland used to be a sure thing for property investors. In fact, if you bought the right house in Auckland around 2008, there’s a good chance you would have almost doubled your money by now. However, in the last three years, Auckland’s market has slowed down and things have changed.

Even though Auckland has calmed down, there are still capital gains to be found. Here’s where you should look:

1. Dunedin

Since 2016, Dunedin City’s median property price has increased by between 8 and 14 per cent a year and currently sits at just $427,500. This growth is most likely driven by strong demand and a lack of supply – during July there were only 418 properties available for purchase in the area, according to the Real Estate Institute of New Zealand. There’s also a lack of rental supply in Dunedin, which has caused a sharp rise in the price of rent in the city (and a corresponding increase in rental yield for investors).

What’s more, Dunedin is about to break ground on the most expensive ever public hospital build in New Zealand history ($1.4bn), as well as a number of other major infrastructure projects. These projects along with Dunedin’s already strong economy bode well for the future of the city’s property market from an investment perspective.

Wellington’s property market is facing a severe rental shortage.

2. Wellington

Wellington’s median property price has been behaving similarly to Dunedin’s, seeing impressive growth over the last three years. With that said, the market has slowed down slightly over the last 12 months, with a median property price increase of only 1.6 per cent.

On the plus side for investors, the price of rent in the Windy City rocketed upward by 10 per cent during 2018, according to TradeMe. In fact, at the beginning of the year, Wellington overtook Auckland as the city with the most expensive rent in the country. The fact is, there aren’t rentals or houses for sale to satisfy demand, which puts upward pressure on prices (and will continue doing so for the foreseeable future).

This makes Wellington a hotspot for investors looking for both high rental returns and solid capital gains.

Palmerston North’s property prices are increasing fast.

3. Palmerston North

Prices in Palmerston North City’s property market are increasing faster than almost any other in the country right now. Over the 12 months to June, the median price increased by a whopping 18.9 per cent to $460,000.

What’s more, properties are selling fast – in just 30 days on average, according to the REINZ (for context only Otago and Gisborne properties are selling faster). This indicates that Palmy is in the grips of a demand/supply imbalance and that prices could keep increasing in the near future. The economy here is looking positive too, with spending growth growing by 2.2 per cent in 2018 (more than twice the national average). All these factors means that despite its small size, Palmerston North has to be on the map for property investors NZ-wide.

Have you considered investing in any of these NZ cities? Which is your pick for the most promising property market in the country? Let us know in the comments, or give us a call to arrange your finance when you’re ready to buy.