Investors could soon squeeze first-home buyers out of the Hamilton market and push rents higher, a local real estate agency says.
Lodge Real Estate’s managing director, Jeremy O’Rourke, said: "For most of 2013, we’ve been saying the interest from the investor market in Hamilton continues to be strong, particularly in the $320,000 or less price bracket. Historically, what happens in a strong investor market is that they begin competing with renters who are looking at their first home purchase.”
He said that would push prices up and keep people in rentals for longer, causing more demand for rental property, increasing rents.
"It’s highly likely in the next six months we’ll start to see this phenomenon emerging within the Hamilton market.”
He said it was likely the Reserve Bank’s intervention in introducing loan-to-value speed limits would work against renters looking to buy and make the squeeze even tighter.
"The intervention by the Reserve Bank could have unintended consequences as it is likely to keep people in rentals longer as they save up a deposit. This will just add further pressure on rental rates, while allowing property investors to control the market and push up house prices in those lower brackets even further.”
Occupancy rates in Lodge’s property portfolio, Hamilton’s largest, are 98.6% - one of the highest occupancy rates seen in more than a decade for this time of year. Rents have risen an average of 3% over the past 12 months.
O’Rourke said there was a lack of housing stock available.
"At the end of July, we had 748 houses for sale within the Hamilton market. At the end of August, we had the exact same number - 748. We only have three months’ of stock on the market and lots of keen buyers snapping up quality homes. Although the median fell, it reflects both investors’ confidence in Hamilton, as they snapped up properties under $200,000, and a lack of available properties in the Rototuna area."
Hamilton’s median house price for August was $327,500, compared with $345,000 in July and $335,000 in June 2013.