Residential rental growth is running at historically high levels, as wage growth and an imbalance between supply and demand hits home.
Property research firm CoreLogic said rents surged 6.1 percent in the year to October, roughly twice the long-term average of 3.2 percent growth.
"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," CoreLogic NZ chief property economist Kelvin Davidson said.
"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 that situation could change if the incoming government produces "property friendly" policies.
Nationally, rental yields edged up to 3.2 percent from a trough of 2.6 percent for much of 2022 and was at the highest level since late 2020.
However, Davidson said yields were 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."
Meanwhile, Auckland rentals yielded the lowest return for investors, and Wellington was also sub-par.
Davidson said the Reserve Bank's move to introduce debt-to-income ratios was still under review.
"However, even if they're not imposed for another year or so, this property recovery still looks likely slow and patchy, given the challenges of high mortgage rates."