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Cashed up investors entering the rental market looking for positive returns

By The Lodge Real Estate Team on 2022-10-14

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

Lodge Real Estate Managing Director Jeremy O’Rourke says agents are meeting with an increasing number of investors who are cash buyers looking for a safe haven for their money and not wanting to buy more shares in the current volatile stock market.

“Investors seem to be looking for a haven for their money amid share market uncertainty and rising inflation and they are seeing the rental property market as a good place to sit it out for a while,” says Jeremy.

Rental demand is outstripping supply in the city. Lodge Rentals received 829 applications for 139 available properties in September. Rents have also increased by 8 percent in the mid- to upper-range of the rental market over the past 18 months.

“We’re still in a housing crisis and investors are seeing good returns. With current share market volatility, these cashed-up investors are seeing the rental property market as a haven for their money,” says Jeremy.

Investors are currently receiving yields of between four and five percent on rentals, a better option than leaving money in the bank where it was being eroded by inflation, says Jeremy.

Investors have also settled into the Government’s 10-year bright line test and are looking at rental properties as a longer-term investment, upwards of 10 years, he says.

“Global stock markets are in turmoil and inflation is eroding any gain made on money deposited in the bank. Commercial property is also still a complex investment option, so we are seeing more investors returning to rental property looking for long-term investment,” says Jeremy.

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

While property listings have fallen from 1050 in August to 950 in September, he expected October to bring its usual upswing in listings. Agents were also seeing activity from developers who were selling up, presenting some good opportunities for buyers.

“There have been a number of developers selling up and having to adjust their expectations around prices. This is presenting some good opportunities for buyers,” says Jeremy.

As reported by REINZ on 12 October, Hamilton’s median house price dipped slightly to $780,000 in September from $785,000 in August. 201 homes were sold in Hamilton during September which is up slightly from 196 in August and compare to 282 sold in Hamilton during September 2021.

“The number of sales is increasing, and the market is picking up. There is intent and optimism in the Hamilton residential market and urgency from buyers. It’s a good time to invest in property if you’re looking for a long-term investment,” says Jeremy.


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