Hamilton Residential Market Review

The Reserve Bank LVR restrictions continue to affect the Hamilton housing market. The number of house sales has dropped 20% since restrictions were enacted. However, statistical data shows the Reserve Bank’s loan-to-value (LVR) restrictions are not having as big an impact on residential house prices (ie. as opposed to volumes) as initially anticipated.

This analysis was done by Lodge following the release of Real Estate Institute of New Zealand (REINZ) figures (for April), which showed Hamilton’s median housing price at $360,500.

Lodge managing director Jeremy O’Rourke says the market has shown good resilience in the face of the Reserve Bank’s market intervention (designed quell the inflationary effect Auckland housing prices were threatening to have on the economy).

“Before sifting through the data, we were putting the continued rise in the median down to the lack of first home buyer activity at the entry level end of the market; with buyer activity strong at the $400,000-plus end of the market, we’ve continued to witness the median creeping up over time, Mr O’Rourke says.

“However, with the benefit of hard statistics, and being able to reflect on market trends over nine months, it is now apparent the LVR restrictions are not having as big an impact as once thought, and this is certainly the case at the macro-level. In fact, evidence shows first home buyers are still in the Hamilton market (albeit in lower numbers).

“What the aggregate data shows is that these first-home buyers are more discerning, and they’re willing to pay for higher-quality housing if they have access to the necessary capital,” Mr O’Rourke says.

April’s median house price in Hamilton was $360,500, slightly down from March’s median price of $375,000.  Mr O’Rourke says this should be kept in context: “People in the market should be mindful that March is traditionally the strongest sales month of the year, and that April’s median is significantly up on August 2013’s median of $327,500 (when the LVR restrictions began to take shape).

“There is currently a lot of stock on the market, and we’re now seeing buyers shunning low-quality homes.  In some cases, this sort of buyer behaviour means some low-quality houses are selling for less now than they sold for pre-recession.

“On the other hand, quality homes on the market are not listed for long – they are getting snapped-up quickly, and buyers are willing to pay a premium for the right location and property type,” Mr O’Rourke says.

Rototuna, Hamilton East, Hillcrest, and Central City continued to be strong-performing suburbs.

The number of Hamilton-city homes sold during April was down slightly to 204 (from 257 in March).

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