OCR drop and census data present opportunities to invest in Hamilton

Real estate and property management experts? Certainly.

Fortune tellers? Quite possibly.

As early as winter we were making predictions about an increase in market activity leading into the spring/summer period. Following today’s Official Cash Rate (OCR) drop of 50 basis points, to 4.75%, we’re feeling confident the market is well and truly back on track.

What began with a steady, but noticeable, uptick in enquiries and open home visits from about May, soon turned into genuine intent and property transactions across all sectors of the market.

With more properties being transacted and an expected median price lift, we can start to see how positive market forces are having an effect – spearheaded by OCR rates lowering.

What an OCR cut means for house prices

Before today’s announcement, the Reserve Bank cut the OCR in August for the first time since 2020, reducing it by 25 basis points to 5.25%. 

The OCR impacts the mortgage rate that banks can charge, and while banks had already started lowering their rates, today’s announcement reflects further confidence in the market. 

Lodge Real Estate Managing Director Jeremy O’Rourke says with cash easier to access thanks to lowering interest rates and an overall lift in sales activity, there’s every indication the market is starting to function across all levels again.

“When investors started to compete with first home buyers, we realised the market was starting to look up. Agents were fielding more enquiries, homes were receiving multi-offers, and more were selling at auction. Now, the $1m-plus market is starting to transact, which is generally the last sector of the market to pick up. 

“I expect from here we can start to see the median house price rise in the months ahead.”

Home ownership census data provides opportunity for investors

Recently released figures from the latest Census show Hamilton city has the lowest home ownership rates in New Zealand at 53.5%.

However, Lodge City Rentals General Manager Jason Waugh says this statistic presents an opportunity for investors. 

“On the face of it the Census data could look disappointing, but what it doesn’t show is that Hamilton’s sheer population growth in recent years has created a demand for rental property, one that quite frankly outstrips supply.

“Every month, we see a third of new rentals going to people new to the city. Hamilton is second only to Auckland in terms of projected population growth in the next 25 years, and we know home ownership rates among migrants lag for a few years while they rent and find their feet.”

He says this, alongside a market upswing, presents immediate opportunities for investors.

“With our high migration levels, we have more tenants needing rental properties. With favourable market conditions, we have funds that are easier to access, and a good number of investors are taking advantage of that.

“My message would be to get in now before the market really heats up.”