Investors climb on the Hamilton bandwagon

Cashed-up investors are being drawn to the Hamilton property market where rents in the mid to upper range increased 8% in the past 18 months and demand is outstripping supply.

Monday, October 17th 2022, 2:05PM

Lodge Real Estate managing director Jeremy O’Rourke says agents are meeting with an increasing number of investors who are cash buyers amid a volatile stock market and rising inflation. “Commercial property is also still a complex investment option, so we are seeing more investors returning to rental property.”

Newer investors see the rental property market as a good place to sit it out for a while, he says.

Lodge Rentals received 829 applications for 139 available properties in September. Rents have also increased and investors are receiving yields of between 4-5% on rentals, a better option than leaving money in the bank where it was being eroded by inflation,” says O’Rourke.

He says investors have also settled into the Government’s 10-year bright line test and are looking at rental properties as a longer-term investment.

Alongside cash investors, Lodge agents are also seeing more activity among first-home buyers and traditional property investors.

Property listings have fallen from 1,050 in August to 950 in September, but O’Rourke is expecting an increase this month.

Agents are also seeing activity from developers who are selling. “There have been a number of developers having to adjust their expectations around prices. This is presenting some good opportunities for buyers,” he says.

Hamilton’s median house price dipped slightly to $780,000 in September from $785,000 in August. About 200 homes were sold in Hamilton during September which is up slightly from 196 in August and down on the 282 sold during September last year.

Further up the state highway in Auckland, investors have played a more prominent role in the residential housing market, so last year’s tax changes and reintroduction of loan-to-value restrictions have hit the market harder than other regions.

It has also had a fall in population as students and people on work visas fled back to their own countries when the pandemic hit in 2020. The immigration tap has not been turned back on to any extent while Aucklanders have turned to other parts of the country to establish a new home.

The biggest city in the country also has a large number of unsold homes. It has seven months’ worth of sales on the market compared to about 2.5 months last year.

The number of properties for sale across the country continued to soar in August, rising a record 76% when compared with August last year, data from the latest Trade Me Property Price Index show.

Trade Me property sales director Gavin Lloyd says nationwide property supply has risen for nine months straight. Supply is well above pre-pandemic levels. August marked the third month in a row when listings spiked by more than 50% year-on-year.

Tags: investor confidence