Has the Hamilton property market reached its peak?

[Maple17]

Hi all,
I would like to seek some opinions of yours especially those with more experience in property investment than us on the state of the property market in Hamilton city, especially in good parts such as Rotorua, flagstuff, Huntington, etc.

Your feedback is much appreciated as it will help us to decide on whether we should invest down there or stay in auckland. Our budget is to around early $600s for a 3 bedroom brick and tile in Hamilton. Can stretch to early $700s if in Auckland. Looking at medium term iinvestment at this stage.

[Rosco]

What is the cashflow, if you buy $600k 3 bedroom home in Hamilton? ie rent less all expenses.

No one has a crystal ball and only time will tell.

Quite a few agents, such as Jo Harris from Lodge post the auction results each week on facebook, these give an idea of the market.

The LVR changes have definitely had an effect, but is that just a little flat period while people get used to them, or is it the peak?

My opinion is that Hamilton has jumped too much and doesn't have the same fundamentals as Auckland. A lot of investors have purchased in Hamilton recently, but does Hamilton really have that many tenants to fill all the properties? I guess time will tell.

The unknown for me is interest rates. In a normal cycle the interest rates would be going up and that would ultimately help to kill the boom. But currently you can borrow at 4%, so its a little different.

I would be very careful speculating on Hamilton at the moment and would only buy if the cashflow really made sense. Most likely you would need a really good 'Twist' to achieve this.

Ross

[marknfs]

Population growth is the key factor that got me to invest down there.
My opinion is that nothing beats having your feet on the ground for a while, as there is so much variation by street in the older suburbs.
Also I think that the 'new subdivision' suburbs (Rototuna etc) are overpriced due to demand from investors wanting a 'simple' investment - and that there is still good growth in the more traditional areas. Hillcrest is nice but seems to be the 'it' suburb for out-of-town investors and has also jumped beyond its fundamentals.
New builds (exempt from LVR) could be a good option, or the good older neighborhoods of Hamilton.

[Bobsyouruncle]

The only real issue with Hamilton is that the regions tend to often bom only every second cycle. So jumping in when it has already gone crazy can mean a long time before the next run. Auckland is more consistent in that regard

[Bluecoat]

Have a read of Tony Alexander's piece on housing and demand.

As someone has mentioned , Hamilton didn't have much growth in the first decade and has only caught up this decade. so if you were someone who needed to cash in for retirement in the last decade you were ** out of luck.


Certainly will be interested to know how much of the price rises in Hamilton is due to investors and FHB. I know the former were more active since last two years and that's where the majority of the price growth came from.
However, as Auckland is getting expensive to live in , if more people move to the next closest city , then again we may see sustained growth,

http://www.landlords.co.nz/housing-s...mit=Show+Graph



Meanwhile A suburb like Papatoetoe with similar trend has really taken off because of the population and demand.

[OneStepCloser]

My observation is that the demand for properties that do not appeal to home owner (not well maintained, not so good location and also type of house) have definitely stalled a bit, but well maintained, those that appeal to home owners are still in strong demand. I went to a few open homes and those appeal to home owners have lots of people going through and also got offers very quickly, often above asking price.

I feel Auckland is always more steady, but only if you can afford it. I personally rather have a smaller loan even if the yield is similar, thus not feel comfortable with Auckland market. But if you are going to spend the same amount of money and get similar yield, then Auckland maybe better.

[P.Bateman]

Population growth is the key factor that got me to invest down there.
Also I think that the 'new subdivision' suburbs (Rototuna etc) are overpriced due to demand from investors wanting a 'simple' investment - and that there is still good growth in the more traditional areas. Hillcrest is nice but seems to be the 'it' suburb for out-of-town investors and has also jumped beyond its fundamentals.
New builds (exempt from LVR) could be a good option, or the good older neighborhoods of Hamilton.

Yes totally agree with Mark. We purchased a rental in Hamilton last year and even then the yields in that part of town Rotutuna etc were low and not worth investing in. I would say better to look in Aberdeen zone area of Dinsdale, Hillcrest of HBHS zone. Its hard to say what the LVR change effect will have- listening to Kris Pederson on a podcast he said demand may drop as now you need 40% regardless of AKL or not so may see investors shift back to AKL. On the other hand 40% of a Hamilton houseprice is much lower than an AKL houseprice

[Don't believe the Hype]

Kp's assumption there is that investors will have the 40% deposit require to head back to Auckland

[Bluecoat]

. On the other hand 40% of a Hamilton houseprice is much lower than an AKL houseprice

Agree, even with if its 40 % lower than Auckland it doesn't have the same dynamics as Auckland in terms of population , job prospects etc etc.

[Maple17]

Thank you very much for all your feedback. I think we have a few more things to consider before making that final decision. We are aware that prices have gone up quite a lot in both Auckland and Hamilton and I would tend to buy something solid and well built in a good area so we have set our budget up to early $600s in Hamilton and to early $700s if in Auckland for a 3 bedroom property. We know we will have a top up on top of the rental but once again rather buy well in this stage of the market so hopefully we don't lose value easy even if the market turn against us once we bought.

[Beginner1]

My recent dealing tells me Hamilton mini boom is all but over. Few people at open homes and at Auctions. Auction clearance rate is poor. Friend of mini took a $50k in a quick flick deal purchassed in April.
According to Real Estate Institute of New Zealand figures Hamilton’s median house price decreased to $493,750 in August from $510,000 in July.

Quite baffled by most newspaper articles still saying prices are going up.. Not in the Hamilton I live in. Any thoughts from Hamilton investors?

[Livie]

We own a property in Hamilton and are pretty happy with how things are going. Our house is in Hamilton East and in a very nice area. In the last couple of months 3 houses in our street (all next door to us) have sold in the $600k. It is rumoured one of them had p contamination and was pulled form the market for a while and still went into $600k. There has been pretty good growth and the sales figures are way up from what we got our house valued for last year. We bought the property under RV about 5 years ago. This is great but we are planning on holding onto our property medium to long term.

There is still room for growth in Hamilton. Tainui has gained some of there consents for the inland port and housing they will be building out at Ruakura. The powers that be are foreseeing growth or they would not have bothered sorting out all the new roads through Hamilton and to Cambridge etc.

[Bobsyouruncle]

Hamilton won't stop. It's already commutable and getting easier every year. It is Auckland's first true Satellite city. Another decade or two or so and it should start to double every ten years like Auckland as it will more or less be Auckland.