Interest in entry level homes in the $500,000 to $600,000 price bracket is leading activity in the Hamilton property market, with transactions in this range accounting for 20% of total sales by Hamilton real estate agency, Lodge Real Estate.
Lodge Real Estate Managing Director, Jeremy O’Rourke, says this is a marked increase from the 10-12% of the market this price bracket usually accounts for, and is due to a significant rise in first home buyer and investor activity.
“There’s really strong interest in the market from both of these buyer profiles, and they’re not just looking; they’re ready to transact. With the median price pulling back, first home buyers and investors are seeing the opportunity and taking it with both hands,” says Jeremy.
“This has already been demonstrated by the uptick we’ve seen in open home attendance for late January, with the number of people attending up 40% compared to early December, as buyers return from their summer holidays ready to set up their new home for 2023.”
He says this movement is crucial for the rest of the market, as first home buyers release first home sellers further up the ladder to upgrade and buy their next home.
“It would have been a challenge to find a decent property in the $500,000 - $600,000 bracket 18 months ago, but with the considerable price adjustments buyers have recognised that they can now find good value in this segment of the market.”
Renewed interest from investors is being driven by high rental demand across Hamilton, with only 30 available properties out of a total of over 3700 properties under management at Lodge City Rentals.
National rental prices have increased 4.4% in the 12 months to December 2022 as measured by Statistics NZ, with Hamilton rents following a similar upward trend.
“Lodge City Rentals had its biggest leasing month in our 40 year history in December. The team signed 175 tenancies. Thirty eight percent (38%) of those tenancies were people coming from outside the city and looking to rent before potentially buying property. Investors are seeing this pressure on rents, and thinking they can buy ahead of the market.
“With both investors and first home buyers active, we could find competition ramps up, as the stock in the $500,000 to $600,000 price bracket gets snapped up within the next few months.”
He says interest rates continue to be a key factor in buyers’ urgency, with the fear of missing out on an achievable rate top-of-mind. Even with ANZ cutting its home loan rates by 55 basis points effective from 2 February, after the news that unemployment rose to 3.4%, Jeremy says it’s still hard to predict how interest rates and inflation will track over the next 12 months.
Looking to the year ahead, Jeremy says most factors point to the Hamilton market picking up because city growth and pressure on accommodation is not slowing. More people are seeing Hamilton as a great lifestyle choice, with major events such as the FIFA Women’s World Cup set to invigorate the city.
“With the amount of new interest in the market, and buyers ready to transact, motivated vendors ready to fund a strong marketing campaign and price their home to the market should see results.
“While the election later in the year may prove to be a point of distraction, we see the positive signals for 2023 balancing its impact.”