Mixed prospects for house prices
House price growth in Hamilton in January was higher than the national average, and pushed the average house price in the city to $908,000.
But even stronger growth in some outlying districts helped boost the national quarterly average.
Latest figures from CoreLogic said Hamilton’s price growth for January was 2.8 per cent, above the national average of 2.1 per cent.
The city average price of $908,000 came from values up 6.5 per cent overall for the quarter and 30.9 per cent annually, both above the national average.
Also, for the three months to January there was double-digit growth in Waikato district (22.4 per cent), Hauraki (21.4 per cent), South Waikato (13 per cent) and Waipa (10.3 per cent).
There are mixed views, however, on just how much the Waikato region’s strong performers can continue to stand out.
In an analysis for Stuff, CoreLogic’s head of research Nick Goodall said he believed the general outlook for the Waikato region was ‘‘relatively robust’’.
‘‘Each of the areas surrounding Hamilton have solid, broad-based economies which have experienced above average employment growth.’’
However, he noted that affordability had become ‘‘stretched’’ based on changes in prices to incomes ratios, and how long it takes to save a deposit.
Otorohanga has seen a significant deterioration in affordability recently, with South Waikato and Matamata-Piako also of particular interest, Goodall said.
And investor activity was likely to fall because of recent tax changes, credit policies and affordability challenges.
‘‘Areas that saw a significant upswing in investor activity recently which may not now appeal to investors include Hamilton, Hauraki and South Waikato. If this is also met with a lift in listings then there’s likely to be less price pressure and in some cases prices may fall.’’
Hamilton had 50 per cent-plus more properties for sale than it did a year ago.
But the rest of the region is sitting at about the same levels as last year, which were near all-time lows, Goodall added.
He also noted in ‘‘a lot of those smaller regions closer to big cities, we’re still seeing some good growth’’. That could be supported by people looking for larger lifestyle sections still within commuting distance of Hamilton.
Simon Lugton, managing director of Lugtons real estate in Hamilton, said a factor that could slow price growth was the increased volume of homes coming on the market. He said there was a 30 per cent increase in January this year over the same month in 2021, and a 47 per cent rise Waikato-wide.
‘‘There’s a lot more choice for buyers’’, he said, adding that the pressure on buyers to decide quickly was easing. ‘‘Those times are probably in the rear-view mirror now.’’
Lending restrictions and higher interest rates would be other factors restraining prices. ‘‘The signs are they’re hitting the first-time buyers hardest,’’ said Lugton.
Investors generally were more cautious as well and he expected rates of increase generally to continue slowing in the first half of the year.
However, John Vandy, branch manager at Harcourts in Hamilton, said it had been a ‘‘full noise’’ start to the year with a lot of buyer and seller interest.
Prices would be supported by the fact that ‘‘fundamentally we still have a bit more buyers than sellers’’ and he expected this to continue till the supply-demand equation was more ‘‘neutral’’.
Vandy said the increased cost of new builds would be another factor. ‘‘That will underpin existing house prices.’’
Paula Jelaca, principal at LJ Hooker real estate in Ngāruawāhia, said there had been ‘‘a big drop off in buyer interest’’ since Christmas as new credit restrictions started to bite.
However, she believed people were still hungry for housing and they would work hard to make things work with their financing.
There were currently 35 homes available for sale in Ngāruawāhia, Taupiri and Horotiu compared to about 160 three years ago.
Ngāruawāhia had shown shown ‘‘huge growth’’ in the past two years, she added, and people now couldn’t buy an average home for under $600,000.