Why Waikato landlords should be quietly confident

18 May 2023 The Lodge Real Estate Team

Market Updates

As the trademark Hamilton fog starts to roll in, the cooler months of the year are finally here. This doesn’t mean it’s time to slow down and hibernate though; in property management, it pays to stay ahead of the pack.

Until regulation for property managers goes through the legislative process, with all provisions planned to be in force by mid-2026, at Lodge City Rentals we set our own high standards of service.

As part of maintaining this service standard, our team caught up this month to listen and reflect on what we should ‘keep, stop, start’ to provide you, our landlords, with the best in rental management. We look forward to rolling out some of the team’s innovative ideas, although don’t expect to notice them all!  Some of the changes we’ll be making are behind the scenes, all with the goal of ensuring the Lodge Rentals ‘ship’ sails smoothly for our landlords and tenants.

This sense of quiet confidence also extends to my view on the current property market. Rather than buy into the ‘doom and gloom’ and let the industry mood mirror the weather, I’m seeing plenty of reasons why landlords should feel more upbeat than the news media portrays. From some positive signs out of the real estate market, to investors choosing to retain their portfolios rather than sell, as well as that relentless tenant demand I always note, there are more than a few reasons for cautious optimism.

Hamilton's property market: Buyer interest increasing

In his latest update, Lodge Real Estate managing director Jeremy O’Rourke acknowledged that while listings remain low, buyer interest is growing as the number of offers rolling in rose by the end of April. Interest from other main cities continues to flow, prices are coming back and there’s even a bit of fear-of-missing-out creeping in.

Our wider economy

From a national outlook, there’s speculation that the Reserve Bank’s next interest rate announcement, scheduled for May 24, may be the last of the big hikes, and most experts believe that interest rates have peaked. The Reserve Bank also proposed some welcome tweaks to loan-to-value ratios last month, although tweak is the operative word.

In addition, Statistics NZ’s rental price index for all rentals was up 3.8 per cent compared to a year earlier, with prices increasing 0.4 per cent month on month. Interestingly, Trade Me shared last month that rents for smaller houses are reaching record-breaking highs due to demand soaring, and this does line up with the popularity of two-bedroom properties we’re experiencing. This all sits alongside an expected influx of people migrating to New Zealand.

Going against the narrative we’ve seen for the last couple of years, the number of properties being sold by investors and multi-property owners has plummeted since the market downturn began, outpacing drops by all other groups. So, no large-scale exodus here – to me, this shows the confidence landlords have in retaining their portfolios.

The election

This is definitely a ‘wait-and-see’ with five months to go until the general election, but I’m sure many investors’ heads perked up when National made their announcements a few weeks ago that they would:

  • Reinstate the ability to evict tenants without cause
  • Roll back the provisions which see fixed-term tenancies roll into periodic tenancies (in most cases)
  • Restore interest deductibility, and shift the bright-line test back down to two years

These changes could make the road to investment more favourable, but of course we’ll see what happens come October 14.

Hamilton's own economy

Thanks to the up-and-coming integrated commercial hub, the Ruakura Inland Port, international and national companies are starting to establish a foothold in Hamilton. As businesses recognise the advantages of nearby roading and rail links and ‘set up shop,’ more workers will be attracted to the region. Those workers, and their families, will need quality rentals, presenting an opportunity for current and potential landlords.

With Matt Stark’s Made set to open later this year, and Hamilton ‘booming’ according to the Waikato Times with plenty of city builds including Union Square and the ACC complex, I know I’m proud to call this city my home – and its likely more are set to do so over the coming years. The city is also easy to get around and could be considered a relatively ‘safe’ spot for investment when you consider the recent extreme weather events around the country.

Consistent rental demand

I won’t dwell on this one, as regular readers will know the situation. In this climate, it’s safe to say that the right investment properties will be snapped up quickly by quality tenants. At the start of May, we hit a low of just 17 empty properties available for rent, out of more than 2,700 we currently have under management.

Hopefully these insights have inspired some quiet confidence or at least a small shift in mindset. If you’d like to talk through any of my key points, or discuss where the current investment opportunities lie, my door is always open.

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