Investor Article

“Investors are quite keen on Hamilton.” Here’s why.

Image of Oliver Pearson

Author: Oliver Pearson

Manager and Property Investor for 20+ years

Mar 9, 2023
Hot air balloon above misty Hamilton

In February, Hamilton's housing market continued to experience a decline in prices, but the good news was that the rate of decline was lower than all other major cities in New Zealand, except for Christchurch.


According to CoreLogic NZ, the nationwide downturn accelerated with a 1% monthly drop to an average value of $944,077, the largest monthly decline since October 2022, following relatively minor falls in December 2022 and January 2023.


However, the latest CoreLogic House Price Index showed a slightly lower than average February drop of 0.8% in Waikato's largest market, Hamilton, to an average value of $827,095.


The quarterly Hamilton fall was 1.3%, and the annual decline was 8.1%. On an annual decline basis, Hamilton was the second lowest among the main centres, with only Christchurch lower at 1.7% down.


This contrasts with national annual falls of 8.9%, Wellington 19.7%, Auckland 11%, Dunedin 10.5%, and 9.2% in Tauranga.


CoreLogic's chief property economist, Kelvin Davidson, explained that Hamilton's slower rate of decline was partly because city prices hadn't previously risen as much in affordability terms as they had in some other centres, and the city's good and diverse underlying economy was another factor supporting city prices.


Davidson also notes that investors are “quite keen on Hamilton”, with no signs of any willingness to sell up in the city.


So, why are investors keen on Hamilton?



1) Strong and diverse economy


Hamilton has a diverse and stable economy, with a mix of manufacturing, healthcare, education, and technology industries.


Hamilton's economy has been growing steadily - GDP in Hamilton City was provisionally up 4.1% for the year to December 2022, compared to a year earlier, and outstripped NZ’s 2.8% for the same period.


The growing and diverse economy means that there are plenty of job opportunities in the city, which attracts people to move to the area and increase demand for rental properties.



2) High rental yields


Despite the downturn in house prices, rental yields remain relatively high in Hamilton. According to February’s CoreLogic NZ data, gross rental yields are 4% or higher in popular rental arrears like Dinsdale, Frankton and Hamilton Central.


Those figures compare favourably to Auckland where yields are often 3% or lower for your standard 3-bedroom rental.



3) Affordability


Compared to other major cities in New Zealand, Hamilton's housing market is more affordable.


The chart below from CoreLogic NZ shows the percentage of household income needed to service a mortgage in each of NZ’s major cities. Hamilton is the light blue line at the bottom.


You can see that Hamilton has been, and continues to be, more affordable than many other NZ cities.

Image of Oliver Pearson

Oliver Pearson

Manager and Property Investor for 20+ years

Image of Oliver Pearson

Oliver Pearson

Manager and Property Investor for 20+ years

Oliver Pearson began investing in property aged 21 and has since bought, developed and sold real estate in the UK, USA, South East Asia and New Zealand. After a career in banking he is now on the management team at Waikato Real Estate and has contributed to property articles for NZ Herald, Stuff and Property Investor Magazine.

Based in Raglan, Oliver's passions extend beyond property to surfing, hydrofoiling, and providing a taxi service for his children.

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