Lodge Real Estate Managing Director Jeremy O’Rourke says ‘sticky’ home buyers and cautious investors could combine to give Hamilton buyers a break from record-breaking house prices in the city.
“Hamilton experienced a record number of homes sold in the city during March. It’s likely to sit around 460 once final numbers are confirmed later this month. The Lodge Real Estate team saw our median house price soar above $800,000 for the first time ever and our mean house price broke the $900,000 barrier for the first time. Therefore, we anticipate there will be a record-breaking median price, from all agents combined, when confirmed by REINZ later this month,” says O’Rourke.
However, he confirmed that for the first time in many months, the market is experiencing buyers holding back slightly from offering the ridiculously high prices seen in city auction rooms over the past nine months.
“We describe many buyers currently as ‘sticky,’ meaning they are sticking to their final offers rather than ratcheting upward.
“At the same time we expect investors will pull back slightly, but only temporarily, for the next few months as they assess the Government’s housing package announced in March.
“The result is that we may start to see some of the city’s housing stock stay on the market for longer than the 24 days-to-sell average we saw in February. Vendors will take time to adjust to buyers’ reality checking behaviour and that could also help ease the city’s stock problem.
“If you look at historical property cycles, we see this happen whenever there’s a boom – prices plateau for awhile as the market catches its breath and then it takes off again. We feel that pause coming,” says O‘Rourke.
However, O’Rourke cautions that any leveling of Hamilton house prices is likely to be short-lived.
“REINZ reported Hamilton’s median house price in February was $750,000 which is four percent (4%) lower than the national median of $780,0001. However, if you look at the city’s mean annual earnings of $63,281, we are only one-point-five percent (1.5%) lower than the national mean of $64,2372. These two figures combine to demonstrate there’s still a lot of head room in the market and we should still continue to see prices lift. Hamilton still represents a great value market,” he says.
O’Rourke says demand for houses in Hamilton continues to exceed supply and he doesn’t expect the Government’s housing packaged announced in late March to change the situation.
“We don’t think the Government’s new measures will alter demand in any way. The real crisis is we do not have houses – either to buy or to rent – to meet demand in Hamilton. The Government is trying to dampen investor demand to give first home buyers a chance, but we don’t imagine any change from investors in the mid- to long-term. These measures equate to re-arranging the deck chairs,” he explains.
He said bare land is selling to Hamilton developers at extremely high prices per square metre - costs that will be passed on to new home buyers.
“Last week we saw a raw section sell to a Hamilton housing developer for $1500 a square metre. We have a 4000 square metre section closing this week in Northridge that will sell for around $1000 a square metre. Last year this type of development land was selling for less than $500 per square metre. That escalated cost of land is being passed right through to buyers,” says O’Rourke.
O’Rourke said auction clearance rates are at an all-time high with around 85% of homes coming to auction in the city’s auction rooms being bought under the hammer.