Hamilton tenants are settling in for the long haul, with many accepting they won’t be buying property any time soon.
Just a few years ago the average duration of a tenancy in Hamilton was 12 months, says Jason Waugh, general manager at Lodge City Rentals. "Now we are seeing up to two years on an average tenancy,” he says.
According to the latest OneRoof figures, Hamilton’s average property value jumped 26.1% ($191,000) in the last 12 months to $922,000. The surge has put pressure on those looking to enter the market, with first home buyers needing to find an extra $38,000 for a typical 20% deposit.
Cost of living increases and tougher mortgage lending rules have also kept many in the rental market than they may have expected or planned for.
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In Hamilton, the market is brisk for tenants looking for a home. Lodge City Rentals had 2,000 tenant enquiries in the first 17 days of 2022, and in the week ending January 16, it received 387 tenancy applications and let 49 properties. Those numbers are similar to this time last year, says Waugh, but demand is rising. “It’s not going to be long before we are running at a shortage,” says Waugh.
The most requested rentals so far this year are three- to four-bedroom homes, a change on last year when one- to two-bedroom homes were in demand, but Waugh says Hamilton tenants tend to be adaptable to what is on the market. “Availability is changing the dynamic and [tenants] are forced to change. It's like any commodity market. When your supply chain is running out, then people just diversify and go into other areas of the market. Instead of going flatting with two or three people, now they have to live by themselves.”
Rents, like house prices, are rising fast. In the year to November 1, 2021, the median rent for Hamilton city rose from $470 a week to $480. For the upper quartile, rents rose from $540 to $570 and in the lower quartile they fell from $360 to $350.
But Waugh says the sharp increase in rents is not the biggest hurdle facing first home buyers in Waikato. “The biggest hurdle for most of 2022 is rising interest rates. I think you’ll find that the demand back onto rental properties is actually going to increase,” he says.
“Buyers are being hit left right and centre. For those that are trying to get into the market, it just becomes a bit more out of reach than what they thought.”
Quinovic Hamilton principal Mark Laurence agrees that the average tenancy tenure is increasing – he pegs it at 3.5 years – but he says many tenants his agency deals with are moving to Hamilton for work and own property already. “With Hamilton expanding its commercial and government sectors, we are attracting a lot of skilled work force from around New Zealand. We are finding these tenants potentially own property somewhere else and are coming to Hamilton for a two- or three-year assignment.”
Laurence believes that first home buyers who are determined to buy are succeeding. “We have so many tenants come through the doors and end up being first home buyers a couple of years later.” That includes three members of Laurence’s own staff who all bought their first homes between July 2020 and July 2021. “I had one couple living in a studio for 18 months. I had a chat with them and introduced them to my mortgage broker and six months later they’d bought a brand new house.”
