Hamilton Residential Real Estate Market August 2012

Hamilton residential real estate is well on the way to recovery. Sales jumped 26% for the first six months of 2012 compared to the same period last year.

 

The pressure on prices is yet to be fully felt in Hamilton, since the pick-up in buyer demand has been met, so far, with keen sellers. However, this situation is unlikely to be sustainable and signs are now emerging of a ‘shift in the goalposts’. This is highlighted in the plummeting number of houses available for sale over recent months. Although seasonal trends suggest this fall in activity is traditional, the severe limit to buyer choice is beginning to place pressure on prices in a few select suburbs and price ranges, it the situation seems set to continue.

The effect of a lack of supply in properties for sale is reflected in the June median, which suddenly jumped to $350,000 (from around $330,000 in preceding months). The main cause was the acute lack of availability of properties for sale between $250,000 and $300,000; this resulted in a ‘skew’ in the distribution of sales, rather than a value shift.

Buyer confidence is improving, and this is likely to be driven by an expectation of low interest rates over the short to medium term, together with the value-for-money proposition Hamilton enjoys over the rest of the country. This ‘value gap’, illustrated by the accompanying graph, is attracting an ever-increasing circle of investors returning to the market. To an extent, a slight increase in the pool of rentals available is keeping rent rises at-bay, although this situation is expected to be short-lived. Economic activity within Waikato grew 5.8% last year. The trickle-down effect is inevitable job creation, which, in-part drives population growth (as people from outside the immediate area are increasingly attracted to these jobs). The housing needs of the population growth leads to new sales activity, and/or a greater demand from people wishing to rent; both scenarios place pressure on accommodation costs.

 

2011

2012

Median price (6 months)

$319,000

$330,000

Number of sales (6 months)

1047

1317

Approx houses available for sale

1007

945

 

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