Hamilton faces rental home crisis

Hamilton rentals are in hot demand.

Hamilton is facing a major residential rental property shortage, according to Lodge Real Estate managing director Jeremy O'Rourke.

"Hamilton's rental supply is at a critically low level, and unfortunately there is little good news for those looking to rent in the near future. Currently we have less than 1 per cent vacancy. We are signing new lease agreements for our rental properties even before tenants move out."

Mr O'Rourke said the Reserve Bank's Loan to Value (LVR) restrictions were the key factor behind the lack of supply and few new rentals becoming available in the near term.

The LVR restrictions on property investors coupled with a pull-back in lending by the four large Australian banks had the effect of turning off the lending tap and side-lining demand from buyers. However, buyers and sellers are poised to move as soon as restrictions are eased, which could create another market surge.

"Half way through this year we have seen a marked difference in Hamilton's residential property market in comparison with the past two years. The frantic activity we have seen is over for now and the city's home sales activity is easing into a more normal market rhythm."

Mr O'Rourke said continued foreign and inter-city migration was likely to see prices stay stable to rising in the next six months. General elections always cause a hesitancy in the market as buyers and sellers usually wait until there is certainty around the governing party and its choices.

We are signing new lease agreements for our rental properties even before tenants move out."

Jeremy O'Rourke

The Real Estate Institute of New Zealand's most recent data shows Hamilton's median house price fell from $534,500 in May to $515,000 in June with a total of 269 homes sold in the city in June compared with 341 the previous June. It is currently taking an average of 32 days to sell a home in Hamilton.

Colliers international, investment sales and leasing broker Justin Oliver said well-tenanted properties with good location and up to NBS (new building standards) were always in demand. Buyers could be particular - only wanting retail or office space - and could come from all over the country.

"There's a bit of activity coming from the Auckland market as people are looking for a better yield that they can get there. A few years ago you didn't see that in Hamilton. Now they are here and looking for space."

While there was significant new building going on and refurbishment of existing buildings there were still more buyers than property available and strong demand on retail, office and industrial space, he said.

Mark Brunton, a director of Colliers International said when it came to large industrial parks the big buys recently included Ports of Auckland's 33ha inland port in the Northgate Business Park at Horotiu and Visy, an Australian cardboard manufacturer, which is busy developing a 10ha site in the western precinct of Titanium Park near Hamilton airport.

"Typically sites in the industrial parks were going to owner operators at around $250 a square metre with average site sales between 2700 and 5000sqm. Most of it is going to local businesses looking to relocate," Brunton said.