National rental growth has soared to 6.1%, nearly double the long-term average growth rate, according to property research firm CoreLogic.
According to CoreLogic's November Housing Chart Pack, rental yield has hit its highest level since late 2020, edging back up to 3.2% from a trough period of 2.6% for much of 2022.
Auckland yields remain the lowest and Wellington is also under 3%.
CoreLogic NZ's chief property economist Kelvin Davidson said "a number of factors" are contributing to the surge in rental growth including higher wages alongside a tightening supply and demand balance as migration soars in New Zealand.
"The recent quiet patch in purchasing activity by investor groups will have dampened rental supply at a time when soaring net migration is placing upwards pressure on demand," Davidson said.
Davidson said despite the increase, yields are still relatively low by past standards and less than the income returns on some other asset classes such as term deposits.
"With rising rents and yields, and some more investor-friendly tax policies on the horizon, we may see investor participation begin to rise, albeit slowly," said Davidson.
"Our latest buyer classification data shows mortgaged investors are responsible for just one in every five purchases, as higher deposit requirements, low rental yields, and lack of mortgage interest deductibility reduce some appeal," he said.
Davidson said it will be interesting to see how they perform in the coming months after a change of government and "property friendly" policies.
The firm also reported that national property values saw their first rise in 19 months, signalling the market downturn is "officially over."
Property sales in October rose 13% compared to a year ago, the sixth consecutive monthly increase.
There were 9012 new listings over the four weeks ending November 12, down on the same period last year,
The market share for first home buyers remained at a record high of 27% - with Auckland and Christchurch 29% respectively.
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