Hamilton has about 60,000 homes for about 180,000 people. It’s projected that over the next 50 years these numbers will roughly double to about 120,000 homes for about 310,000 people.

The city, part of the golden triangle of Auckland, Hamilton and Tauranga, has a thriving economy, relative housing affordability (compared to other big cities) and a quality of life that continues to attract people and businesses.

It offers a broad range of job opportunities with education and research and development among the largest work providers. The city is also famous for its water sports, which include jet boating, canoeing and parasailing.

Earlier this year, Hamilton overtook Tauranga as the country’s fastest growing city. It was a crown Tauranga had held for 27 years. Tauranga and Mount Maunganui had long enjoyed being a tourist mecca, a city of beautiful beaches and boomers, looking to its cousins over the hill as a landlocked town of bogans and boy racers.

However, latest population estimates from Statistics NZ show between June 30, 2022, and June 30, 2023, Hamilton city grew 3.4 per cent while Tauranga city, which includes Mount Maunganui and Pāpāmoa, grew 2.5 per cent.

How did Hamilton swipe the crown from Tauranga? Migration.

Looking at Auckland, Tauranga and Hamilton, where the number one booster of population growth is migration, it’s different for each city – Auckland is international migration, Tauranga is internal migration, and Hamilton is natural increase (births).

Comparing Hamilton and Tauranga, Hamilton is better able to grow its own workers, whereas Tauranga is better able to attract workers to move in.

Confidence Boost

In Hamilton last year there was a 35 per cent rise in commercial development, which included the construction of a world-class regional theatre and the development of a four-star hotel and dining precinct. Hamilton and Waikato Tourism recognises the value of these projects for giving confidence to people who want to invest in the region.

Defining the future of key public spaces, such as the library, civic square, and play space, is also being worked on.

Hamilton Council recognises that a great modern city is not just about having one central area; it’s about building a series of hubs and a sense of community across suburbs.

House prices in many of these suburbs have been rising – increasing by between 3.1 per cent to 9.4 per cent over the year to September 1.

CoreLogic data shows homes in Queenwood rose a healthy 9.4 per cent from $926,050 to $1,013,200, followed by a 5 per cent gap to Beerescourt, rising 4.5 per cent from $951,150 to $994,400 and Chedworth increasing 4.1 per cent, from $861,100 to $896,350. House values in Claudelands rose 4 per cent, Maeroa and Chartwell 3.7 per cent, and Temple View 3.5 per cent.

At the bottom end of a rising scale, properties in Baverstock rose 3.4 per cent from $909,700 to $940,900, while prices for Hamilton Lake houses increased 3.2 per cent from $853,350 to $880,750, and in Bader by 3.1 per cent from $571,700 to $589,650.

LJ Hooker Hamilton managing director Aaron Davey says in the first six months of the year realistically priced properties sold. However, some vendors realised market prices are not that of 2021 and chose to withdraw from the market, a trend seen throughout New Zealand.

“The biggest hurdle facing vendors is the perception that if they bought at the peak of the market and want to sell and buy again now, they are losing money. The reality is that what they are buying would have come back in price by a similar percentage,” he says.

“Some vendors can’t get their head around that and stay in a property that they no longer wish to own while their over-ambitious price just helps other properties sell around them.”

While there is a good supply of houses on the market, Davey says he wouldn’t call it an oversupply, and many are selling in competition. “We reached the bottom of the cycle earlier in the year and I don’t expect prices to decline further.”

As a result, he says investors are back and feel they are buying at the bottom of the cycle and can see signs of recovery, he says.

Investors, Flippers

Properties requiring renovation are in high demand with investors, flippers and first-home buyers. Sellers of new/modern townhouse/unit properties have found it tough competing with older stand-alone properties on larger sections.

Lodge Real Estate managing director Jeremy O’Rourke says during the market lull there was a noticeable decline in developer interest and activity. Developments were sitting half-finished, builders were down-tooling, and completed new builds were declining.

“We know that developers gain confidence when the real estate market is going well, and with more confidence all round we could expect finished builds nine to 12 months from now, which will certainly go some way to addressing the overall need for more homes,” he says.

Davey says home buyers are not throwing caution to the wind and are purchasing where they can afford, within a reasonable distance to work or business, and sometimes school zones.

Houses in Hamilton are still substantially cheaper than in Auckland. Davey says while buyers are mostly local, there are more Aucklanders or out-of-towners cashing up and moving to Hamilton. He has had more international inquiries about property in the city in the past two weeks than in the past two years, including sight unseen purchasers.

He is predicting a positive market next year with more buyers competing for good properties, with a swathe of big developments on the cards, including the Mistry Centre Pullman Hotel development on Ward St, the Tainui Group Holdings project next to Centre Place, the regional theatre and new apartment blocks underway at One Cook Street and Anzac Parade.

Sentiment Shift

A shortage in the rental market could change next year as investors and developers come back into the Hamilton market.

Glasshouse Property Management founder and director Jeremy Baker says there has been a shift in market sentiment since the first Reserve Bank OCR cut in August and a signal of others to come. “While it’s not translating to transactions yet, it will early next year.

“Developers, who took a backseat over the past year to 18 months, are starting to look for land and run the numbers which are starting to make sense again. We will naturally see activity early next year, but at the moment it’s probably more of a sentiment shift than an activity shift,” he says.

What’s been quite challenging for Hamilton investors, particularly those from out of town, has been the difficulty in securing new builds for a decent yield.

Yields on investment property are not making sense yet, Baker says. “If an investor bought a new build at a 5 per cent yield, they would probably be quite pleased, but when they are borrowing money at 6 or 7 per cent, it doesn’t make sense.”

In Baker’s eyes, Hamilton hasn’t been recognised in terms of how well it’s performing economically and that’s boosting population growth, both natural within Hamilton in particular, and also migration.

“So, population growth is strong, economic growth is strong, and we’re really not building enough houses, which we need.”

Rental Market

Rents are also starting to slow, even though Hamilton doesn’t have enough rentals. And because rents are high, Baker says tenants are becoming fussier.

“A nice two-bedroom property will rent for nearly $600 a week quite quickly, but a tatty house that might be in the $520 range will be more challenging to rent.”

Because of high rents tenants want quality for their money. “Whereas many tenants might have been looking for a three-bedroom house, they are now going to a superior two-bedroom house for the same money. They are trading bedrooms for quality.”

Renters are an even mix of people who already live in the city and are moving, coming from elsewhere in New Zealand, and international immigration.

Close to 40 per cent of all new leases each month in Hamilton are to out-of-towners, according to Lodge Real Estate.

Rents for a three-bedroom house in the eastern suburbs range from $560 a week in the lower quartile and $640 in the upper quartile and are indicative of the general market, Baker says.

Many renters choose properties in good school zones, which pushes demand up. “It is really difficult getting into what are regarded as the zones that have the better schools. Anything central and the northern end of Hamilton is popular.”

Most properties for rent have more than a dozen applicants, Baker says. It normally takes about two weeks from advertising to getting an agreement signed and a deposit paid.

He has just advertised 21 townhouses in a build-to-rent development on Wellington Street, Hamilton East, and six were snapped up straight away.

Baker’s agency has a 99 per cent occupancy rate and he believes most rental companies would have a similar level because of the shortage of rentals, which has been an ongoing problem for some time.