Wellington property market gathering steam after election

Tuesday, 14 November 2023

A 2.5% average increase in the last three months shows Wellington’s property is once again in demand.

Wellington’s residential property market is rebounding after enduring almost two years of dropping prices.

The latest Quotable Value House Price Index showed the average Wellington home value increased by 2.5% in the three months to October -- the first substantial quarterly increase since 2021.

The average house price was now $844,000, compared with the national average of $907,000.

QV senior consultant David Cornford said activity has increased from the beginning of the year, with more active buyers and more properties coming to the market over the last few months.

“Well presented and well located homes are generally selling well.”

Upper Hutt was the only Greater Wellington district to experience a decline during the month of October, down 0.2%, with all local council areas home value growth throughout the quarter.

Cornford said they expected values to “rise modestly” over the next 12 months.

Trade Me Property rental price index Oct 2022 versus Oct 2023 shows Wellington’s media rents have gone up by 4.8%.

“However, this growth will likely be dampened by economic headwinds, including continued high inflation, the cost of living crisis and rising unemployment.”

Townhouse and apartment values were not as as strong as stand-alone homes because of the high number of new completions, Cornford said.

Wellington renter Aishwarya Taukari was blown away by how expensive rent was in the capital. Trade Me Property rental index figures show Wellington’s median at $650 per week is the second highest in New Zealand.

Wellington rents remained among the highest in the country but were not climbing as fast as some centres.

Wellington’s median weekly rent in October was $650, up 4.8% on last year. The national average was $620, which was 6.9% higher than last year.

Aishwarya Taukari moved to Wellington just under a year ago and was surprised by how difficult it was to find suitable accommodation.

As a young professional she said rents were high and some of the rental properties were substandard.

“I have a decent paying job and still it’s very expensive. I barely save anything.”

After much searching, Taukari managed to find a suitable house in the central city that she is happy with.

Trade Me’s Property sales director Gavin Lloyd said new Government policies could affect the rental market.

Data from the New Zealand Property Investors Federation showing rentals bonds lodged versus bonds closed tracked over recent years. The graph represents a drop in supply.

“With National [Party] gearing up to lead the country for the next three years, there's potential for more investors to dip their toes back into the property market.

“If National moves forward with their plans to tweak interest deduction rules and the bright-line test, we might see a boost in investor confidence,” he said.

Lloyd said this could encourage property owners to offer more rentals, easing supply pressure, which could in-turn cool rent increases.

The New Zealand Property Investors Federation said Tenancy Services data that showed fewer houses available for rent keeping pressure on rental rates.

The Federation keeps tabs on the amount of money lodged in accommodation bond which gives an indication of the overall volume of rentals across the country.

“An analysis of the tenancy services data shows a consistent decrease in new rental bonds since 2013, with a significant drop from 2019 onwards.”