Photo: RNZ / Nate McKinnon
House market investors may do well to focus on yields rather than capital gains, as prices continue to fall and expected to remain flat for some time.
CoreLogic NZ chief property economist Kelvin Davidson said there were two primary objectives for investors to weigh up when it came to investing in residential real estate - yields or capital growth - with yields looking a bit more positive given ongoing pressure on market prices.
Davidson said high rental prices and steady demand gave yield focused investments an edge in current market conditions.
"If capital gains aren't so readily on offer in the future, in the long run sense, then perhaps the focus on yield will become much more important," he said.
"So you're focusing on something that delivers a good rental return, has scope to see rental growth over time, and I guess pays for itself on a day-to-day basis.
"It could be that plays into the hands of some new build properties, smaller new build properties that are easier to maintain, and less maintenance costs over the long run."
Davidson said capital growth would continue to be constrained by such things as high interest rates and bank lending restrictions.
"We are seeing smaller properties still tend to deliver on yields and good properties deliver on capital gains, but looking ahead, it might actually be that as capital gains are a bit reduced in future the emphasis does come on to yields a lot more."