Wairarapa’s 10-year property gains double Wellington City's

Wednesday, 14 February 2024

Wellington’s 10-year average asking price gain was relatively low compared to other centres.

While at first glance Wellington’s 10-year property gains seemed to be lagging behind outlying districts, one of the city’s foremost investors puts it down to one thing -- apartments.

Property investor Matthew Ryan says Wellington’s property market is heating up more than sales stats would suggest.

According to Realestate.co.nz’s latest data showing how the average asking price of properties has changed in the 10 years from the beginning of 2014 to the end of 2023, Wellington’s increase was 64%.

That compared to South Wairarapa’s 123% change over the same period.

Prominent investor Matthew Ryan who has 148 properties, most in the Wellington region, said Wellington’s lower stats were misleading and the city was still a good place to invest.

He said most of the gains in property value over the last decade had been on the back of land value increases and due to Wellington’s high number of apartments, many of its properties did not experience the same gains.

“Ultimately it’s the value of land that goes up, not the value of the building structure. So the houses will be doing quite well, but the apartments will drag the averages down.”

Ryan said Wellington’s yields, or return on capital, were still relatively high compared to Auckland where he also owned 20-plus properties.

“Wellington fundamentally is still a fantastic place to invest in because of scarcity. There’s no city in New Zealand that has got more scarcity of land than Wellington central.”

Ryan also said Wellington’s market was more buoyant than the most recent data was showing.

“I think it’s strengthened quite a bit more than 2.8% in the last quarter.

“Once sentiment changes and people start feeling either positive or negative, the tide comes in and out a lot quicker than what the statistics show.”

Nationally, the average asking price was up by 78%, increasing from $504,388 in 2014 to $895,289 in 2023.

Of Wellington’s five districts, Kāpiti Coast was the top-performer seeing a doubling in the average asking price from $456,000 to $913,000.

Next best was Porirua City, which started at $480,000 in 2014 and finished 2023 at $933,000 ‒ a 94% increase.

Lower Hutt City rose 90% to sit at $815,000 at the end of last year. Upper Hutt started 2014 at $415,000 and rose 86% to $770,000 by the end of 2023.

Carterton’s asking prices more than doubled since 2014.

Wellington City started 2014 much higher than its neighbours at almost $600,000 and finished 2023 with a $985,000 average asking price.

In Wairarapa the gains were significantly higher over the past decade, albeit generally starting 2014 with lower asking prices.

Carterton’s starting point was $346,000 which ended last year 120% higher at $763,000. Masterton posted similar gains rising from $322,000 to $713,000 ‒ 122% average gain in asking price.

South Wairarapa was the wider region’s biggest gainer ‒ up 123% to $956,000 from $428,000.

South Wairarapa agent Benn Milne of Property Brokers said remote working was one of the drivers in demand for properties in Wairarapa.

He said prices in places such as Featherston, which experienced some of the biggest rises during the pandemic low interest rate frenzy, were settling back down to more realistic territory.

“We sold a house in the peak of the market in Featherston for 850(K). We’ve recently just sold that same property a year and a half later for 620(K).”

Sarah Wood of realestate.co.nz said the 10-year asking price data underscored a resilient real estate market.

'We saw the market go through a correction in 2023 after rapid growth during the previous few years.

“Despite prices dropping back last year, they are still up substantially in most places when we compare them to the years before Covid-19 ignited the market.”