Auckland ‘wealth effect’ hits Hamilton; first-home buyers get a hiding
Hamilton, New Zealand – Lodge Real Estate's managing director, Jeremy O'Rourke, said Hamilton is seeing greater numbers of Auckland investors jumping into the city's property market.
"With house prices at an all-time-high in Auckland, owners have a larger asset base to borrow against. We're seeing them take advantage of this new-found wealth and using borrowed funds to get into property investments here in Hamilton.
"On one hand, this 'Auckland Wealth Effect' is beneficial for local sellers because Auckland investors are often willing to pay more for Hamilton properties. They perceive them to be a 'good deal,' relative to similar properties in Auckland city.
"However, first home buyers are taking a hiding. It's that lower end of the market where Auckland investors are competing. And in most cases, they are in a much stronger financial position than first home buyers who typically have limited extra funds to draw upon, which means they can't be as competitive in an auction or situation where there are multiple offers on the table," explained Mr O'Rourke.
There were 335 homes sold in Hamilton during the month of May, with 59% of those in the under-$400,000 price range.
"In Hamilton's suburbs where there are traditionally a high percentage of first-home buyers, stock are down dramatically. If we look at the number of homes available for sale at the end of April as compared to May: Fairfield stocks were down 25%, Forest Lake stocks were down 50%, Hillcrest stocks were down 33% and Nawton stocks were down 20%," explained Mr O'Rourke.
Demand for Hamilton homes continues to outstrip supply. The average number of days a home was on the market in May was 33 days. This compares to 35 days in May 2014.
There were 750 homes available for sale in Hamilton at the end of April, compared to only 642 at the end of May.
"This dip in the number of homes available for sale happened despite more homes being listed in May, as compared with April. This level of buying is unprecedented," said Mr O'Rourke. "Quality properties are being snapped up very quickly in Hamilton. Buyers are finding they need to act fast when they find a home they want.
"We are recommending buyers get their finances settled with their bank. That way they can make decisions quickly and aren't disappointed."
Hamilton's median dipped to $370,000 for the month of May, compared to $375,000 in April. Hamilton's median in May 2014 was $366,500.
Lodge Real Estate is Hamilton city's largest real estate agency by volume with over 34% of residential market share. For the latest REINZ market data, visit www.reinz.co.nz.