Home values in Wellington have reduced at twice the average rate nationally, according to QV

Tuesday, 8 October 2024

Elissa Johnsen, partner and three children explored many suburbs before finding their dream home.

We always hear the classic ‘spring has sprung’ line hitting the property market - but it seems like it isn’t the case this year, particularly in the capital.

Home values in the Wellington have dropped at twice the average rate nationally, according to the latest QV House Price Index.

The Wellington region’s average home value has reduced by an average of 3.2% in the September quarter – a slightly higher rate of reduction than the 3% decline reported for the August quarter.

Overall the average home decreased in value nationally by 0.4% last month and by 1.6% in the September quarter – compared to a 0.5% monthly decline and a 2% quarterly decline in QV’s August index.

The national average was now $901,920, which was just 0.3% higher than the same time last year.

Wellington QV registered valuer Jack Whiteman said home loan serviceability, job sector uncertainty and the general cost of living are all having an impact on existing homeowners and prospective buyers in the capital city.

Kapiti Coast and Hutt City both experienced the largest average home value declines this quarter at 3.6%. Upper Hutt recorded the smallest average quarterly decline at 1.5%, with Wellington City (-3.2%) and Porirua (-2%) sitting in between those three.

“Despite having the advantage of choice and competitive pricing, buyers are having to take a cautious approach to the market,” Whiteman said.

“Given the current economic circumstances and uncertainty about job security following some public sector redundancies earlier in the year, only those with secure employment are willing to take on debt at this time. This is resulting in a relatively quiet property market.”

The Wellington region’s average home value has reduced by an average of 3.2% in the September quarter.

Across the rest of the country home values had continued to slowly level out in the September quarter, with the average three-month rolling rate of reduction slowing in Auckland (-1.7%), Christchurch (-0.8%), Hamilton (-1.2%), Dunedin (-0.8%) and most of the other main urban areas.

QV operations manager James Wilson said sentiment was shifting across much of the country thanks to dropping interest rates.

“There seems to be a spreading expectation that interest rates can only go one way, and so we’re seeing more people at open homes, in auction rooms, and browsing for property online,” he said.

So it certainly seemed like a general uplift in property values is now on the horizon, but despite growing confidence and optimism that we’re through the worst of it, the conditions weren’t yet conducive to growth, he said.

“The cost of borrowing still remains relatively high, the cost of living is restrictive, and there are significant worries about job security – especially in Wellington.”

High levels of stock for sale on the market were also having a dampening effect on prices, but that was expected to shift over the coming months, he said.

“Generally speaking, those who are in a position to purchase still have a raft of different options to choose from right now, especially within the main centres. So there isn’t so much pressure on prices currently, with more than enough houses for sale to meet the current level of demand.

“First-home buyers remain very much in the ascendancy right now, but we’re already starting to see more investors coming out of the woodwork.

“This will ramp up the level of competition in the housing market and help to absorb some of that excess stock. Values will inevitably tighten again when prospective buyers aren’t so spoilt for choice. That hasn’t happened yet.”