What is the average rental yield in Wellington?

Authored by the expert who managed and guided the team behind the New Zealand Property Pack

Yes, the analysis of Wellington's property market is included in our pack

Who is the author of this content?

BAMBOOROUTES

A team specialized in real estate investing in APAC countries (Japan, Thailand, Indonesia, Australia, etc.).

We are a team of financial experts, legal professionals, developers, and local real estate specialists dedicated to helping people like you avoid mistakes when investing in real estate in a foreign place, particularly in Wellington. If you'd like to learn more about us, you can check our presentation page.

How this content was created 🔎📝

At BambooRoutes, we explore the Wellington real estate market every day. Our team doesn't just analyze data from a distance—we're actively engaging with local realtors, investors, and property managers in cities like Wellington, Upper Hutt, and Lower Hutt. This hands-on approach allows us to gain a deep understanding of the market from the inside out.

These observations are originally based on what we've learned through these conversations and our observations. But it was not enough. To back them up, we also needed to rely on trusted resources

We prioritize accuracy and authority. Trends lacking solid data or expert validation were excluded.

Trustworthiness is central to our work. Every source and citation is clearly listed, ensuring transparency. A writing AI-powered tool was used solely to refine readability and engagement.

To make the information accessible, our team designed custom infographics that clarify key points. We hope you will like them! All illustrations and media were created in-house and added manually.

What's the current average rental yield across Wellington?

Wellington's median gross rental yield stands at approximately 4.55% as of September 2025, significantly outperforming the New Zealand national average.

The Wellington rental market shows substantial variation in yields, with about 25% of properties delivering yields of 3.8% or below, while the top 25% achieve yields of 5.3% or higher. This wide distribution reflects the diverse property types, locations, and strategies available to investors in the Wellington region.

Growth-oriented properties like standalone homes and townhouses typically target yields between 4.5% and 4.8%, while yield-focused properties such as dual-key apartments can achieve approximately 6% annual returns, though these often come with slower capital growth prospects.

The current yield levels represent an improvement from previous years, primarily driven by property price corrections in 2024-2025 rather than significant rental increases. This market adjustment has created more favorable conditions for income-focused investors seeking steady cash flow from Wellington rental properties.

It's something we develop in our New Zealand property pack.

How do yields differ by property type?

Wellington rental yields vary significantly across different property types, with smaller units consistently delivering the highest returns per dollar invested.

One-bedroom apartments lead the market with average gross yields of 4.65%, making them the most attractive option for yield-focused investors. These properties benefit from strong rental demand from young professionals and students, while requiring lower initial capital investment compared to larger properties.

Two-bedroom houses deliver competitive yields of approximately 4.63%, particularly in outer suburbs like Upper Hutt where purchase prices remain more affordable. However, as property size increases, yields generally decline due to disproportionately higher purchase costs relative to rental income potential.

Three-bedroom apartments and houses both average around 4.08-4.09% gross yields, while larger family homes often fall below 4% due to their premium pricing in desirable suburbs. Units and townhouses in areas like Upper Hutt can achieve exceptional yields up to 5.56%, reflecting the balance between affordable entry prices and solid rental demand.

Which Wellington areas show the strongest and weakest yields?

Upper Hutt consistently delivers the strongest rental yields in the Wellington region, with units achieving up to 5.56% and houses averaging 4.7% gross returns.

Wellington Central offers solid yields between 4% and 5.5% for apartments, benefiting from high rental demand from professionals working in the CBD and government sectors. The area's proximity to employment centers and amenities supports consistent occupancy rates despite higher property prices.

Kapiti Coast provides balanced opportunities with house yields averaging 4.27%, while Northern Suburbs deliver approximately 4.2% for family homes. These areas offer good rental demand from families and long-term tenants seeking more space and lifestyle benefits.

Lower Hutt and Porirua represent the weakest yield performers, with average returns of 3.0% and 3.9% respectively. While these areas may offer stronger capital growth potential due to their established suburbs and proximity to Wellington city, they require higher initial investment for lower immediate income returns.

Premium waterfront suburbs like Seatoun typically deliver yields below 3.5% but may compensate investors through superior long-term capital appreciation prospects.

How does property size impact rental returns?

Property size directly impacts rental yields in Wellington, with smaller properties consistently delivering higher returns per dollar invested across all areas and property types.

Studio and one-bedroom apartments achieve the highest yields because they rent for relatively more per square meter compared to larger properties. These compact units attract young professionals, students, and single tenants who prioritize location and affordability over space, creating strong rental demand that supports premium per-square-meter pricing.

Two-bedroom properties often represent the sweet spot for many investors, balancing decent yields with broader tenant appeal. They attract young couples, small families, and professional shares, providing more stable tenancy while maintaining competitive returns.

As properties expand to three or four bedrooms, yields decline significantly because purchase prices increase faster than rental potential. Large family homes command higher absolute rents but require substantially more capital investment, reducing percentage returns for investors.

The size impact is particularly pronounced in premium suburbs where larger properties carry significant price premiums but rental rates don't increase proportionally, making smaller properties the preferred choice for yield-focused investment strategies.

What are typical purchase prices including all fees and taxes?

Wellington's median house prices have corrected to approximately $760,000-$850,000 as of September 2025, creating more accessible entry points for property investors compared to previous peak levels.

Property Type	Typical Purchase Price	Additional Costs
One-bedroom apartment	$268,400	Legal fees ~$4,000
Two-bedroom apartment	$413,100	Legal fees ~$6,200
Three-bedroom apartment	$512,000	Legal fees ~$7,700
Two-bedroom house	$450,000-$600,000	Legal fees ~$6,750-$9,000
Three-bedroom house	$650,000-$850,000	Legal fees ~$9,750-$12,750
Four-bedroom house	$800,000-$1,200,000	Legal fees ~$12,000-$18,000
Upper Hutt units	$350,000-$450,000	Legal fees ~$5,250-$6,750

Legal fees typically represent approximately 1.5% of the purchase price, covering conveyancing, title searches, and settlement costs. Buyers should also budget for building inspections ($800-$1,500), LIM reports ($300-$500), and potential mortgage arrangement fees.

Foreign buyers face additional requirements and potential taxes, though New Zealand has specific pathways for overseas property investment. It's something we develop in our New Zealand property pack.

What ongoing costs should investors factor in?

Wellington property investors face several ongoing costs that significantly impact net yields, with rates, insurance, and maintenance representing the largest annual expenses.

Council rates typically range from $2,500 to $3,500 annually for properties valued around $500,000, with rates increasing approximately 10-12% in 2025 across most Wellington suburbs. Rates are calculated based on capital value, meaning more expensive properties face proportionally higher ongoing costs.

Landlord insurance costs between $2,500 and $4,298 annually in Wellington, with higher premiums reflecting New Zealand's earthquake risk profile. Properties in certain geological zones or older buildings may face premium increases, making insurance a significant ongoing expense for investors.

Property management fees typically range from 5% to 10% of weekly rental income, depending on the level of service provided. Full-service management including tenant finding, maintenance coordination, and financial reporting usually commands fees toward the higher end of this range.

Maintenance costs vary significantly by property age and type, but investors should budget at least 1-2% of property value annually for repairs, upkeep, and periodic renovations to maintain rental appeal and compliance with healthy homes standards.

How does mortgage financing affect net yield?

Mortgage financing significantly impacts Wellington rental property returns, with interest deductibility restoration in 2025 improving the investment equation for leveraged properties.

Current mortgage rates average approximately 4.99% for two-year fixed terms, representing a substantial ongoing cost for leveraged investors. However, mortgage interest is now fully tax-deductible for rental properties, providing significant tax benefits that improve after-tax returns.

Net yields typically run 1.5% to 2% lower than gross yields after accounting for mortgage interest, insurance, rates, maintenance, and other expenses. For example, a property with 5% gross yield might deliver 3-3.5% net yield depending on leverage levels and ongoing costs.

Investors using 70-80% leverage can still achieve positive cash flow on well-selected properties, particularly smaller units and apartments in higher-yielding suburbs. The key is ensuring rental income covers all expenses including mortgage payments, leaving some buffer for vacancy periods and unexpected costs.

The restoration of interest deductibility makes leveraged investment significantly more attractive than during the previous tax regime, allowing investors to maximize their capital efficiency while maintaining competitive after-tax returns.

What's the difference between short-term and long-term rental returns?

Short-term rental strategies in Wellington can deliver higher gross returns but come with increased complexity, seasonality, and management requirements compared to traditional long-term leasing.

Airbnb properties in Wellington achieve median occupancy rates between 49% and 67%, generating annual revenues of $24,000 to $40,000 depending on location and property type. Prime locations near the waterfront and CBD command premium nightly rates but face higher competition and seasonal fluctuations.

Long-term rentals provide more predictable income streams with lower vacancy risk and reduced management overhead. Traditional leases offer stable monthly income, easier financing arrangements, and simpler compliance requirements under New Zealand's residential tenancy laws.

Short-term rentals require active management, professional photography, guest communication, cleaning between stays, and compliance with local council regulations. These additional costs and time commitments can offset the higher gross revenue potential for many investors.

The choice between strategies depends on investor goals, available time, risk tolerance, and property location. Properties in tourist areas or near business districts may favor short-term strategies, while family-oriented suburbs typically work better for long-term tenancies.

We did some research and made this infographic to help you quickly compare rental yields of the major cities in New Zealand versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.

What are current rental prices for different property types?

Wellington rental prices vary significantly by property type and location, with central areas commanding premium rents while outer suburbs offer more affordable options for tenants.

Property Type	Weekly Rent (Central)	Weekly Rent (Outer Suburbs)
Studio apartment	$400-$500	$350-$420
One-bedroom apartment	$460	$380-$430
Two-bedroom apartment	$635	$520-$580
Three-bedroom apartment	$735	$620-$680
Two-bedroom house	$558-$635	$480-$550
Three-bedroom house	$690-$735	$575-$650
Four-bedroom house	$850-$970	$700-$800

Upper Hutt specifically offers competitive rental rates with townhouses averaging $635 weekly and units around $510 weekly, making these areas attractive for investors seeking strong yields from more affordable properties.

Short-term rental properties across all types average approximately $3,373 monthly ($778 weekly), though this varies significantly by season, location, and property quality. Premium locations can command substantially higher nightly rates during peak periods.

What do vacancy rates look like across Wellington?

Wellington vacancy rates have increased significantly in 2025, with approximately 41% more properties listed compared to previous years due to economic softness and public sector job cuts affecting the region.

Apartments, particularly new builds in central Wellington, experience higher vacancy rates as supply has increased while demand has softened. Many new developments have come online just as the job market has tightened, creating oversupply conditions in certain apartment segments.

Family homes in outer suburbs like Upper Hutt, Kapiti Coast, and Northern Suburbs maintain lower vacancy rates, supported by steady demand from families and long-term tenants who prioritize space and lifestyle benefits over central locations.

The increased vacancy rates require investors to be more selective about property choice, location, and presentation. Properties that offer good value, modern amenities, and convenient access to employment centers continue to attract tenants despite the softer market conditions.

Investors should factor higher potential vacancy periods into their cash flow projections, particularly for central apartments and premium properties that may take longer to lease in the current market environment.

Who are the main renter profiles in Wellington?

Wellington's rental market serves diverse tenant groups, each with distinct preferences that influence demand patterns across different property types and locations.

Young professionals represent a major tenant segment, particularly in central Wellington and university suburbs. These renters typically seek one or two-bedroom apartments with good transport links to the CBD, modern amenities, and proximity to entertainment and dining options.

Government workers form a significant portion of Wellington's rental market, given the city's role as New Zealand's capital. These tenants often prefer stable, longer-term leases and are willing to pay premium rents for convenient locations near government offices in central Wellington.

Students create consistent demand in suburbs near Victoria University and other educational institutions. They typically seek affordable shared accommodation or smaller apartments, often prioritizing price over luxury features.

Families and long-term tenants gravitate toward northern and western suburbs, seeking larger homes with gardens, parking, and access to good schools. These tenants provide stable, longer-term occupancy but require properties that meet family needs and safety standards.

Short-term visitors, including business travelers and tourists, concentrate in CBD areas, waterfront locations, and select city-fringe suburbs that offer easy access to attractions and transport hubs.

What are the rental yield trends and forecasts?

Wellington rental yields have experienced significant fluctuations over the past five years, with recent market corrections creating more favorable conditions for yield-focused investors.

From 2018 to 2023, yields generally declined as property prices outpaced rental growth, making Wellington less attractive for income-focused investors. However, 2025 has seen yield recovery as property prices corrected while rents remained relatively stable.

Rental rates have plateaued or declined in some areas, with decreases of up to 8% since 2024 in certain suburbs. This rent softening reflects economic pressures, job market uncertainty, and increased competition from higher supply levels across the Wellington region.

The one to five-year forecast suggests gradual recovery and moderate growth as interest rates decline and economic conditions stabilize. Property price corrections have reset the market to more sustainable levels, creating opportunities for investors who can weather short-term volatility.

Long-term forecasts remain positive for Wellington rental yields, supported by the city's role as the capital, ongoing population growth, and limited developable land constraining future supply. It's something we develop in our New Zealand property pack.

How do Wellington yields compare with other cities?

Wellington's average rental yield of 4.55% significantly outperforms Auckland's 3.9%, making it one of New Zealand's more attractive major city markets for yield-focused investors.

Compared to other New Zealand cities, Wellington performs competitively against Christchurch and Hamilton, which deliver similar yields in the 4.5-4.6% range. This positions Wellington favorably among New Zealand's major urban centers for rental property investment.

When compared to Australian cities of similar size and characteristics, Wellington's yields are competitive or slightly superior. Australian capital cities like Canberra and Adelaide typically deliver yields between 3.9% and 4.6%, while regional centers can achieve higher returns of 5.9% to 7.9% for certain property types.

Wellington's yield advantage over Auckland reflects the capital's more affordable property prices relative to rental rates, while maintaining the benefits of a major city including employment diversity, infrastructure, and lifestyle amenities.

The comparison becomes more favorable when considering Wellington's potential for capital growth alongside current yields, as the city's constrained geography and ongoing development restrictions support long-term value appreciation prospects.

What are the smartest investment choices in today's market?

Smart Wellington property investment strategies in 2025 focus on smaller units, strategic location selection, and maximizing net yields through efficient management and cost control.

1. **Target smaller properties in high-yield suburbs**: Focus on one-bedroom apartments, units, and townhouses in Upper Hutt and similar areas that offer yields above 5% with lower entry costs.2. **Avoid oversupplied central apartment developments**: New builds in central Wellington face rising vacancy risks and yield pressure due to increased supply and softer demand conditions.3. **Consider short-term rental opportunities selectively**: Properties in tourist hotspots or waterfront locations can deliver premium returns, but require active management and understanding of regulatory requirements.4. **Focus on efficient property management**: Minimize vacancy periods through competitive pricing, quality presentation, and responsive tenant service to maximize actual returns.5. **Leverage restored tax benefits**: Take advantage of full mortgage interest deductibility to improve after-tax returns on leveraged investments while maintaining positive cash flow.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.

Sources

1. Opes Partners Gross Yield Wellington
2. Global Property Guide Rental Yields
3. Just Property Wellington Suburb Guide
4. Squirrel Wellington Market Update
5. Hayden Roulston Best Rental Yields NZ
6. Bamboo Routes Wellington Price Forecast
7. OpenExpert NZ Property Taxes
8. Wellington Council Rates 2025
9. Wellington City Council Rates Explained
10. Opes Partners House Insurance 2025