2024: The year that was in property management

As the saying goes, the only constant in life is change, and that has certainly been the theme of the year for the rentals sector in Hamilton. While one constant has been the high level of demand (at times unprecedented) and constrained supply, a mix of government announcements and financial updates has kept us on our toes. Read on for a summary of what the year gave us.

In March we were getting excited for the return of tax deductibility. From 1 April, property investors were able to claim 80% of their interest expenses as a cost for tax purposes, and 100% from April 2025. This would become the start of a wider welcoming of investors back into the market, helped along by some positive press for Hamilton.

Hamilton became New Zealand’s fastest growing city for the first time, overtaking Tauranga who held the top spot for 27 years. Hamilton grew 3.4% between June 2022 and June 2023, faster than any other region. 

The government’s decision to loosen the CCCFA (Credit Contract and Consumer Finance Act) was music to homebuyers’ ears. With the act previously described as overly prescriptive, resulting in cases where otherwise suitable borrowers were declined home loans, the decision to make lending easier meant more people could enter the property market.

With the rentals market so buoyant in Hamilton, the change also made it easier for investors to access lending and purchase rental property in the city, helping address the shortage of quality rental properties in the city. 

The government announced a suite of changes to the residential tenancy act (RTA) to come into effect in 2025, including the return of 90-day ‘no cause’ terminations, returning tenants’ notice period to 21 days and landlords’ to 42 if they want to move or sell, and introducing the ability for landlords to to charge an additional pet bond for tenants with furry flatmates.

The re-introduction of these changes buoyed landlords somewhat, and helped encourage them back into the market.

The Reserve Bank announced they would bring in debt-to-income (DTI) ratios to restrict lending based on income and following that, ease loan-to-value restrictions to effectively lower the amount of deposit needed to buy an investment property.

These changes will take time to bed in, but for now we don’t see any immediate impact on house prices.

Where data showed rental listings were increasing around the country, Hamilton’s stayed low. Nationwide there was a 40% increase in rental listings, but just 10.3% in Hamilton in the three months up to May. This highlighted Hamilton’s strong economic and population growth, and the value investors were seeing in the region. 

Big developments were announced this year for Hamilton, including the Mistry Centre Pullman Hotel development on Ward St, the Tainui Group Holdings project next to Centre Place, alongside progress on the regional theatre and apartment blocks underway around the central city. This shows confidence in the city continues to grow.

The Reserve Bank made two cuts to the Official Cash Rate (OCR), one in August and one in October. Both times the OCR dropped by 50 basis points, bringing it down from 5.25% to 4.75%, and again to 4.25%. Interest rates dropped quickly in the days following, and it was an encouraging sign the property market had bounced off the bottom, and further increased confidence to invest.

As Hamilton’s infrastructure woes continued, property developers pulled back on activity to recoup costs.

As a result, we saw new builds come to market sooner than usual, along with existing property developers couldn’t sit on any longer due to the lag in infrastructure upgrades. Smart investors realised the opportunity, and acted quickly to snap them up.

Let’s see what next year’s annual review brings…