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Hamilton Market and Possible Predictions

30 November 2015

 

Hamilton Market and Possible Predictions


Here is a copy of the median sale price graph from the Lodge Real Estate website.


 

 

 

 

 

 

 

 

 

 

(Click here to view on Lodge Website)

 This shows how much the Hamilton market has changed in the last eight months:

  • March 2015     $350,000
  • October 2015  $435,000

So an increase of $85,000 or 24% in eight months!
 

Last Booms

Looking at the earlier information in the graph, you will see the last boom started around October 2002 ($154,000) and continued for around five years to September 2007 ($365,000).

So, over this five year period, the median sale value increased $211,000 or 137%.

The boom before that, from September 1992 ($105,000) to November 1997 ($168,250), was also around five years, with a gain of 60% over this time period.

 

Flat Periods

  • September 2007 to March 2015, approximately 7.5 years, with decrease of $15,000!
  • November 1997 to October 2002, approximately 5 years, with decrease of $14,250!

 

Trend and Prediction


So the booms are getting bigger in terms of percentage increase, but the flat periods are also getting longer.

Based on history, you would expect the current boom to go for around five years, so until March 2019.

However, the growth, or increase in value, has been extreme over the last eight months.  This would hint that the current boom will be shorter, as it should be impossilbe to sustain that level of growth for a long period.

You also have to take into account the changes to the World economy, changes to LVR, and future changes the Government could introduce.  For example, if the Government / Reserve Bank introduce borrowing limits based on income (such as the 4.5 times income that has been talked about), this could have a huge effect on the property market and could see the property market stall.


 

 

 



My personal prediction?  Let me make it clear, I don't have a crystal ball, so this is just a guess, the same as any other person can make a guess.

  • I feel that prices are going up too quickly in Auckland, Hamilton and Tauranga, and that this growth is unsustainable.
  • Following the LVR changes, I feel other changes must happen.
  • From a Hamilton perspective, we don’t have the same population growth and demand as Auckland.  I’m also very worried that we are reliant on Auckland, and any changes decided to slow Auckland could have major implications on Hamilton.
  • If interest rates go up, many people won’t be able to sustain the mortgages they have taken out.

 

From this, my personal prediction is that the Hamilton and Tauranga boom will peak in around 12 months, so approximately November 2016.  It will be interesting to review in a year to see how close I am!

The Auckland market could be quite different.  There is a large shortage of houses, as well as huge population growth.  So I believe the Auckland market must slow at some point as it has been booming for a number of years.  However, once it slows, it is still likely to keep increasing, just at a slower rate.


I hope you have found this article useful.  Keep an eye out for a further article coming up before Christmas that will suggest some strategies you could put in place around this, depending on your circumstances.


Kind regards
Ross Barnett 

 
 
 
 

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