Hamilton is currently experiencing a consistent slow-burn in terms of price growth. Over the last 12 months it has experienced capital growth levels of 4.5%, outperforming the other two cities in the ‘Golden Triangle’. Auckland has experienced a drop of 1.5% and Tauranga has grown by 3.7%. The current median value is sitting at $580,285, and there are no indications that it will drop. This steady increase is due, in part, to a high demand from first home buyers in the market. They are currently the largest individual buyer group, and account for 29% of purchases. Sales are down slightly from April 2019, but are up in relation to this time last year, and days on market have declined in the last month. These are all good signs that the market will continue to grow.
This increase in first home buyers has resulted in a shortage of stock in the Hamilton rental market. Harcourts stated that “Over the last 12months we have seen a 9.5% increase in the rents over our portfolio. When we ran these statistics 6 months ago, we had seen an 8% increase which shows our rents are still trending upwards. Increased demand is putting pressure on our rental stock and we see this as set to continue with the growth Hamilton is experiencing.” The largest increase in rents have been in townhouses, showing a 14 per cent increase and apartments in the CBD have had an incredible 25 per cent increase. Lodge Rentals manages around 3000 properties in Hamilton. Currently only 1% of its stock is available. New properties such as townhouses and apartments are renting well currently, and are demanding premium dollar. Hamilton is no longer the city of the future, it is the city of now.
The future is bright for Hamilton. The Hamilton to Auckland growth corridor is continuing to develop and expand with the new Ruakura development that is due to open in 2020. This will consist of a 192ha logistics precinct, 30ha of which will be dedicated to an inland port. This port alone will provide 300 additional jobs for the City, increasing the demand for rental properties in the Eastern and Northern Suburbs especially.
In addition to this, there is a large 720ha residential development planned for the south of the city. It will introduce a new bridge across the river, kilometers of river frontage, a large number of parks and up to a hectare of additional shopping areas.
Hamilton is a great option for buyers who do not want to sacrifice capital gains for cash flow. Yields around 6% are still plentiful, however the higher yields can require creativity and knowledge of the local suburbs. With the continued increase in property values, why not make the most of these low interest rates and invest in area that will perform for you both in capital gains and cash flow.