Hamilton renters considering home ownership may feel squeeze
Hamilton renters considering home ownership could soon feel major squeeze
• Hamilton city’s median house
price fell to $327,500 in August from $345,000 in July. This
compares to $330,000 in August 2012.
• 261 homes sold in Hamilton during August, compared to 252 in July and 236 in August 2012.
• The city’s days to sell was 37 in August, as compared to 35 in July. This compares to 37 in August 2012.
Hamilton, 16 September 2013 – Lodge Real Estate’s managing director, Jeremy O’Rourke, today cautioned Hamilton renters considering purchasing a home that increasing property investor activity could soon put the squeeze on them from both sides of the market.
“For most of 2013, we’ve been saying the interest from the investor market in Hamilton continues to be strong, particularly in the $320,000 or less price bracket.
“Historically, what happens in a strong investor market is that they begin competing with renters who are looking at their first home purchase.
“When this happens, unfortunately, it creates a cycle whereby house prices start to rise due to increased competition. Those rising prices cause people to stay in rentals longer, which means decreased rental stock, higher demand for rental housing and higher rental rates.
“It’s highly likely in the next six months we’ll start to see this phenomenon emerging within the Hamilton market,” explained Mr O’Rourke.
Mr O’Rourke also said it’s likely the Reserve Bank’s intervention in raising the loan-to-value ratio will work against renters looking to buy and make the squeeze even tighter.
“The intervention by the Reserve Bank could have unintended consequences as it is likely to keep people in rentals longer as they save up a deposit. This will just add further pressure on rental rates, while allowing property investors to control the market and push up house prices in those lower brackets even further,” he said.
Occupancy rates in Lodge’s property portfolio, Hamilton’s largest, are sitting at 98.6% - one of the highest occupancy rates seen in more than a decade for this time of year. Rents have risen an average of 3% over the past 12 months.
Mr O’Rourke said a further major contributing factor to this emerging trend continues to be the lack of housing stock available.
“At the end of July, we had 748 houses for sale within the Hamilton market. At the end of August, we had the exact same number – 748. We only have three months of stock on the market and lots of keen buyers snapping up quality homes.
“Although the median fell, it reflects both investors’ confidence in Hamilton, as they snapped up properties under $200,000, and a lack of available properties in the Rototuna area.”
Hamilton’s median house price for August was $327,500, compared with $345,000 in July and $335,000 in June 2013.