Dunedin has always been a target for property investment. The traditionally low prices and high yields have attracted property investors from other locations for decades. In the past 100 years, fundamental growth however, has been slow with the Dunedin population hit 100,000 people in the 1890s and only growing 30,000 in over 130 years.

Many people come to Dunedin for work either in the hospital or the university not intending to stay long-term. But the incredible standard of living that Dunedin people have keeps them here. And now the word is getting out.

“I love living in Dunedin. The scenery is incredible, the surfing the best in the country, and people are genuinely friendly. Yes it gets cold in the winter but the summers are amazing and being only 3 hours to the ski fields means that the winter is a fun time also” - Rueben Skipper - Dunedin Property Management.

Property has also seen a boost. Dunedin now has a higher average property price that Christchurch.

For families, you get great bang for your buck. A larger home, closer to great schools and beaches means that you can still have a life during that difficult teenage years.

“We walk our dog on the beach almost every day before breakfast. My kids don’t need rides to school as they can walk, and bus. Even if we do drive them only a 10 minute ride anywhere in the city so it’s easy” - Rueben Skipper

Lack of supply

The biggest challenge for investing in property in Dunedin is the shortage of housing stock. The lack of supply is the main driver of price rises in recent years. Currently there are less than 300 properties for sale in Dunedin whereas in the past it was not uncommon to see over 1000. Prices are up over 20% since 2020 and there’s still a sense of urgency for buyers that hasn’t been diminished by winter.

Rents have also grown. Dunedin hit an all time high in January 2021 with an average rent of $525. The university reported 7.7% growth on student numbers for 2021. The university colleges were oversubscribed and traditional student flats filled up quickly and this put pressure on rentals that were historically rented to a non-student population.

“The demand in January & February was crazy. Some viewings we’d have over 20 groups all desperate to get the property” says Skipper. “It’s only May and we are already renting student flats for 2022”.

Covid19 a blessing in disguise

Initially, it was feared that the coronavirus would destroy the property market in Dunedin but that has been far from the truth.

“Dunedin is a safe haven from the rest of the world. We don’t have any MIQ hotels and we have space. I felt sorry for those people living in apartments in the middle of Auckland or Wellington during the lockdown. In some ways our lives improved in Dunedin. We had access to the beaches and space for home schooling and remote working. I think that stuff has become more valuable and Dunedin has that in abundance” - Skipper Dunedin Property Management.

Dunedin has seen an influx of people returning home from overseas but there has also been a lot of economic development. There are a number of large construction projects happening including the hospital, Hillside workshop, and Otago Polytech.

government intervention will sustain longterm growth

Under a National government Dunedin was often overlooked however, the current Labour government is rewarding Dunedin long term support with an array of economic funding. The hospital build is a major construction project lasting 10 years plus. The impact to the city is forecast to be in the 100s of millions.

On the flipside for the property market is the array of changes to tenancy rules. Healthy Homes Standards started to roll out changes in 2019 and have had regular deadlines for home improvements. Then in 2020 the Residential Tenancy Act Amendment Act was released and gave additional security to tenants and more compliance and cost to owners. Now the most recent announcement by the government was targeting property investors directly with an extension of the Brightline rule and removal of interest tax deductibility.

“For about a month, it felt like the market stopped and digested the changes. The phone wasn’t ringing as much as in January & February. Then suddenly 2 weeks ago it felt like the go button was pushed again and we are receiving calls from property investors almost daily.” - Rueben - Dunedin Property Management

The long term outlook for Dunedin is very good

Dunedin is an old city so an upgrade of the property stock was long overdue. Investment now will mean long term positive outcomes for the city. The underlying value of Dunedin, the scenery, the standard of living, the proximity to Queenstown is no longer a secret. Dunedin is about to see a sustained period of growth and wealth generation not seen since the second world war.

If you’d like to discuss investment options for Dunedin please don’t hesitate to contact us.