Hamilton’s rental market is flying high: why it’s time for investors to buy

Just like the majestic Balloons over Waikato soaring over our city this month, the Waikato rental market remains buoyant, with our property viewings and tenancy applications for last month showing noticeable increases.

In fact, at the end of February we only had 20 empty properties, out of the over 3,700 we manage here at Lodge Rentals. Plus, for the first time ever all of our student-targeted studio units in the suburbs of Hamilton East, Hillcrest and Silverdale are full, as the University bustles with activity for semester one. While there has been some nervousness around those types of properties during the pandemic years, this shows that investing with a long-term vision pays off.

I’ve said it before, but I’m quite happy to say it again: this demand means the rental market here in the Waikato needs ‘feeding’ with more stock. I know there is some hesitancy out there amongst investors, but it’s about finding the opportunities within the current market conditions.

I recently read that in relation to other New Zealand cities, Hamilton’s annual house price decline was the second lowest of the main centres (only Christchurch was lower, and they have a similarly tight rental market) and we fared well on the affordability front. CoreLogic even stated that investors are quite keen on Hamilton and aren’t selling up (a fact we already know), with our diverse economy supporting house prices.

I’m proud to be a Hamiltonian, and I think Hamilton’s visibility as a city that offers a great lifestyle balance and place to raise a family is growing. Our website traffic certainly backs this up, with an uptick in enquiries from outside Hamilton, primarily from Auckland. Plus, with the effects of climate change more keenly felt by many New Zealanders this summer, our geographically-sheltered position is looking quite attractive.

This all means we’re not lacking for quality tenants at the moment. To demonstrate that investors shouldn’t get bogged down in the ‘gloomy’ property news, our Business Development Manager Nic Elliottyson recently sat down with Jordan Cameron from Total Mortgages to talk through some options for Waikato investors. For the rest of this blog, I’ll share some of these insights and why adding to your property portfolio in 2023 could be a smart move.

At Lodge, we often get asked if now is the right time to buy, or whether waiting for better market conditions is the way to go. Talking to Jordan, he notes that from his point of view, there's no better time than the present. We're seeing the downward trend in property values start to level off, a point also noted by Lodge managing director, Jeremy O'Rourke.

Working with his investor clients, Jordan is finding that banks are easing their lending criteria to make money available to investors purchasing new builds. With the Reserve Bank’s new build exemption allowing investors to purchase property without the standard 40% deposit requirement, as well as the interest deductibility rules on new builds, he’s seeing them as a real sweet spot right now.

This fits perfectly with the strong rental demand for new builds in suburbs like Rototuna, Chartwell and Flagstaff, with the south of the city set to get a slice of this action in the coming years. New builds are also in perfect condition with low maintenance and generally comply with the Healthy Homes standards, as opposed to existing properties which show more wear-and-tear.

Jordan says that investors are freeing up money by splitting debt for new builds across lenders, borrowing the deposit from their main lender and obtaining the balance from another bank, and as a result you can leverage your equity and make it go a lot further.

Looking at property sales, in his latest market report Jeremy shared that a large parcel of land in Horotiu recently sold to a developer for $8.3 million (plus GST), suggesting developers are starting to become active again. And as we get further into 2023, the number of listings continues to rise, sitting at 927 in February (up from 889 in January) which means a good range of options on the market.

Remember, if you need expert advice on buying an investment property in Hamilton, come and talk to myself or Nic. We have the inside knowledge and know what works, and what doesn’t when it comes to rental properties.