Five factors frustrate Hamilton home buyers and renters
Hamilton’s median house price broke another record last month. The Real Estate Institute of NZ released its figures for September today, showing the city’s median for last month was $676,000, up from $654,500 in August.
Lodge Real Estate Managing Director Jeremy O’Rourke says many buyers are being frustrated by rising prices and the extreme competition in the city. He says five factors are creating frustration for both buyers and renters.
Competitive bidding, multiple offers “There’s been a large increase in the amount of competitive bidding at auction since July.
“The city’s auction rooms are regularly taking up to 10 homes to auction at one time. Whereas, as recently as July, we would only take four to five weekly.
“Buyers have finally switched on that they must get themselves unconditional and show up to auction ready to compete. If they don’t, they miss out.
“And for those properties not going to auction, we’ll almost always have buyers in competition and the number of offers can sometimes be in the double-digits.”
O’Rourke said the extreme competition in the Hamilton market signals that prices will continue rising through summer.
“We’re seeing high confidence as buyers look to the future. People are feeling safe in their jobs and confident they can carry larger mortgages over the long-term. The recession certainly hasn’t bitten in Hamilton.”
$1 million buyers out in force “July was the first time ever that the number of Hamilton homes sold at one million dollars or more accounted for over ten percent of the city’s total sales.
“And a lot of these sales are coming from people who are already in high-end homes who are switching to larger properties. That’s because you can shift from a one-million dollar home to around a $1.4 million dollar home without increasing your interest cost with rates being so low.”
O’Rourke predicts buyers will continue switching into higher end homes as interest rates hold.
Developers banking land “Development land is in extremely hot demand and this land is being sold at record prices across the city.
“While it’s good news that more development land is being sold because more homes being built will help ease the city’s housing shortage. What’s worrying is an emerging trend of some property investors banking land.
“Some are buying development land with the intention of sitting on it and trading it at a future date. This takes critical land out of the available pool for housing development.”
O’Rourke predicts some developers will continue banking land as they gamble on land prices continuing to rise.
No election distraction “Normally in an election year buyers and sellers alike can become distracted from participating in the market as voting opens. But this year we are seeing no adverse election effects.
O’Rourke says the sheer number of buyers active in the market is keeping pressure on demand and driving prices up to record levels.
Rental vacancy rates not softening O’Rourke said it’s not just home buyers who are frustrated by the current market. Renters are also exasperated.
“More first-home buyers are in the market and taking advantage of the low interest rates. When that happens, normally vacancy rates for rental properties will soften making it easier for renters to get into a home.
“At the moment, we aren’t seeing this happen. There is an absolute slew of people wanting to rent.
“And not only are vacancy rates at an all-time low, there’s also an over-abundance of rental properties that don’t suit families. For instance, we have 66 properties available for rent today but 44 of these are studio apartments. Our team is getting around 700 rental enquiries a week, so you can imagine how irritating it is for those looking to rent.”