Hamilton fastest-growing city again – what will it mean for house prices?

Hamilton has once again taken the top spot as New Zealand’s fastest growing city. For the second year in a row, we’ve come out in front, beating Auckland and previous winner Tauranga.

In 2023 our city grew by 5,900 people, 4,500 of them from international immigration. This is a growth rate of 3.2% on 2022, surpassing Auckland’s 2.5% and Tauranga’s 1.6%.

According to the Waikato Times, Hamilton’s growth has surpassed what even Hamilton City Council had been predicting.

Lodge Real Estate Managing Director Jeremy O’Rourke says there’s lots to love about Hamilton – great schooling, high economic investment, and a great lifestyle, but with growth comes pressure on housing.

“A few factors at play right now have got us into a situation where we’re looking to an upswing in the property cycle and a median house price lift,” he says.

Jeremy points to the Government’s easing of lending restrictions and OCR drops as part of the reason why the housing market is heating up, which could lead to a decrease in stock and put pressure on prices to rise.

“We’re getting back to a fully functioning market across all buyer levels, but in terms of providing housing for more newcomers, we’ll need to build more to avoid a situation where there’s too little stock available.”

Hamilton’s surging population has also created unprecedented demand for rental accommodation, and it is this demand that sees Hamilton buck national rent trends, according to Lodge City Rentals General Manager Jason Waugh.

“The latest Trade Me Rental Price Index is reporting a median weekly rent reduction of 1.6%, with the biggest rent reductions in Marlborough, Canterbury and Hawke’s Bay, and consistent month-on-month reductions in Auckland, New Zealand’s most expensive place to rent.”

The report also highlights a nationwide “softening” of rental demand with listings becoming increasingly more available across the country, which Jason says is not the case for Hamilton.

“We’ve been in this situation for many months now, but rental demand in Hamilton far outweighs supply so we’re very much an outlier to the report’s overall findings in this instance.”

Hamilton’s growth has also impacted the availability of rental properties with a third of all new monthly leases going to people new to the city, many of them Aucklanders making the move down.

Jason is still urging investors to act quickly to secure a rental property and help address demand in the process.

“Our current market conditions are favourable for investors, and many have already taken advantage of current house prices to start or add to their portfolio, but it’s not going to stay that way for long.”