Light at the end of the tunnel for Hamilton’s rental market?

As we get stuck into the second quarter of 2023, at Lodge City Rentals we’ve just come off our busiest month ever (and we’ve been around a long time!). March saw new signed tenancies hit 179, the end product of 3,018 tenant enquiries, 1,262 property viewings and 1,358 tenancy applications over the month.

These stats are a testament to our talented team, and so they all took a well-deserved break over the Easter weekend – I’m assured the Easter bunny did indeed visit! This level of activity is another example of why bigger is better when it comes to property management companies. Our size means we can handle this volume, while providing greater market intelligence, faster response times for maintenance and comprehensive cover for owners’ properties.

These numbers also show the unwavering demand for rental properties in our region, and once again we’re dead-short of listings as the under-supply continues. We currently have only 23 empty properties on our books, and most quality properties coming up for rent are snapped up within days of listing.

I’ve observed a few forces both helping and hindering the supply and demand situation. These make me wonder if we’ll soon be seeing the light at the end of the tunnel.

One trend releasing much-needed rental accommodation onto the Waikato market is the growing number of accidental or unplanned landlords signing up with us. These property owners enter the rental market as a result of a particular personal situation and often don’t (initially) have a long-term investment plan.

Be it moving cities or overseas, major life situations like divorce, employment transfer, inheritance or a growing or shrinking family, where owners usually would have sold their property, they are either unable or unwilling to sell in the current real estate market.

While the team at Lodge Real Estate feel the property market has found its floor and house prices are stabilising, as I shared above there’s no shortage of quality tenant demand for new rental properties. If you’re interested in reading more on this trend, take a look at our blog on the topic.

In not-so-great news for developers, the Hamilton City Council began advising at the end of March that it might not be able to immediately approve new resource consents and three waters connections in some areas where the increasing demand could impact networks and the environment.

While they insist the council is still open for business, the high risk areas identified cover significant swathes of the city, from the south-west (Glenview, Melville, Bader, Deanwell), to parts of Hamilton East, Claudelands, Fairfield, Hillcrest and pockets of Nawton, St Andrews and Rototuna. I understand the argument for sensible, sustainable development and the role infrastructure plays in this, but the move doesn’t bode well for addressing the housing shortage we’re currently in.

Developers are encouraged to contact council early to get advice on any development proposals. I realise, however, these council delays could put a spanner in the works for those already further into the process, or sitting on land in any of the specified areas.

So while accidental landlords could contribute to the light at the end of the ‘rental supply tunnel,’ the council’s decision is more likely to close said tunnel. The wildcard here is of course the economy; Infometrics came out recently with a grim prognosis that inflation will still be at 6.6% by the end of this year, and 3.8% by the end of 2024, higher than the Reserve Bank’s target range of 1% to 3%.

On a more positive note, economist Tony Alexander says that the economy is not permanently ‘munted,’ and anyone who thinks that is going to miss out on opportunities as the economy eventually improves (with the ‘when’ being a matter up for debate). Both Alexander and Kiwibank senior economist Mary Jo Vergara agree that the bottom of the property market is near, with prices set to start rising again later this year.

If you’re ready to boost rental supply and are interested in learning more about the investment opportunities in the Waikato market, our team are always keen to pass on what we’re seeing ‘on the ground.’ And I’ll keep hoping for that light at the end of the tunnel!