The values in the Auckland house market have increased by 14.6% in the past year. That is compared to to an increase of about 7.7% in the NZ50 capital index.

An investor paying cash for the average Auckland home a year ago would have seen an unrealised tax-free capital increase of 14.6%. The taxable Rent yield after expenses would have been under 3%. However many/most investors would purchase the property with a mortgage. With a 50% mortgage, the taxable rent yield has been reduced to about 0% yet the leveraging has given the landlord/ investor an unrealised tax-free return of 29.2% in the past year.

The dividend yield on the NZ50 was about 5%.

The real world lighter actual tax burden on the returns from typical investments in rental housing compared with other investments including overseas investments, fixed interest and shares is not a recent phenomenon. It has contributed to the large percent of NZ household wealth that is in rental housing as opposed to financial investments.

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