City growth, students and hopeful home buyers add pressure to Hamilton’s available rental stock

February often marks the ‘real’ start of the year, as people settle into routine, schools return and we get stuck into work following the long weekends. After high enquiry numbers in January, with our team fielding 3,970 tenant enquiries, February remains steady so far as Hamilton continues to experience growth as a city.

This month marked our first video market update from general manager Jason Waugh – if you missed it, you can watch it here. We look forward to sharing more of these throughout the year.

You will have likely read in the media that many New Zealand towns and cities are experiencing a shortage in available rental properties, with Hamilton not excused from this. There are a few different factors we see contributing to this, with February traditionally being when tertiary students become active in the market before their first semester starts.

Plus, with more barriers popping up for first home buyers, many remain in the rental market for the foreseeable future. In this blog I’ll discuss these two groups in more detail, and why investors continue to sit in a positive position.

Here come the students – domestic and international

We’re seeing plenty of domestic students on the lookout for their next studio or flat in the Hillcrest and Hamilton East areas, but the big news in this area is linked to the re-opening of the country’s borders. From 11.59pm on 12 April, 5,000 international students will be able to enter the country.

Whilst great news, it will put increased pressure on the rental market as they look to start in July’s second semester. And I’d note that landlords should also be thinking ahead to February 2023, when the international student numbers will likely rise significantly as new students look to come to our shores. While Hillcrest, Silverdale and Hamilton East remain student hotspots, they may look to the evolving apartment living available in central Hamilton as well.

First home buyers not buying

It’s well-documented the issues many are facing in securing a mortgage in 2022, with barriers in the form of loan-to-value ratios (LVRs), rising interest rates and controls under the Credit Contracts and Consumer Finance Act (CCCFA).

While Lodge Real Estate Managing Director Jeremy O’Rourke noted in his latest update that the number of homes for sale in Hamilton had doubled compared to the same time last year, and buyers can therefore be more discerning, first home buyers are finding it a tough market to crack. If they can’t buy, many are staying in the rental market and adding pressure to the available pool of properties.

Investor outlook

Given what we’ve discussed, I see the outlook for investors as relatively positive. More homes for sale means more options when looking to secure a new rental property, and the finance constraints affecting first home buyers are less likely to affect seasoned investors. Those with properties well-suited to students will welcome the return of both domestic and international learners, and perhaps it may see an increase in these types of properties being built.

As I mentioned near the start, people continue to move to our river city, and the completion of infrastructure like the Waikato Expressway will drive further development and interest in our region. You can check out our developments video to see more of what is happening around the city and surrounds, and why you should be starting your search now if looking to invest. Plus, the Hamilton market still represents good value, with the median house price reported by the Real Estate Institute of NZ for December sitting at $870,000, below the national median of $905,000.

If you’re looking to invest or want to chat through what’s happening in the market, do reach out to Jason or myself to talk further.

Chat next month,

David Kneebone
Director, Lodge City Rentals