QV’s pick for the next Wellington property hot spots
If this year has taught us anything, it’s that trying to predict the future is an exercise in futility.
Even so, Quotable Value area manager Paul McCorry has been watching Wellington’s residential property market extremely closely and is confident when he says Ōtaki and Featherston will be among the region’s next “hot spots” for first-home buyers and property investors alike.
“For the most part, first-home buyers and investors have already been priced out of Wellington city, either by the high access costs or because of the very low yield relative to the investment cost to an investor,” he said.
“Until now, this has made the Hutt Valley a hot spot for young families and speculators alike. But where once you could get a home on a half-acre section for under the national average, now sales prices are often well over $1m.”
He offered one example of a Lower Hutt home that went on the market on a Thursday and was sold the following day by negotiation for a cool $1.3m. “It does make me wonder if the Hutt Valley has run its course as a more affordable property market,” he added.
Even in the relatively affordable transitional suburb of Wainuiomata, where there has been significant new developments in recent times, a new family home will cost around $750,000-800,000 – well outside the price bracket for most first-home buyers and investors.
Mr McCorry cited Ōtaki’s relatively lower base price and it’s improving transport connections to Wellington city as reasons why first-home buyers might now want to target the area. “We’re already starting to see a northward migration as first-home buyers seek entry-level prices and investors chase more value for their money up the coast,” he said.
“For investors, there is a relatively low-cost access, reasonable yield, and currently only three properties available to rent in Ōtaki at the time of writing, meaning that if you listed a quality property for rent it would likely be snapped up overnight.”
QV’s new rating valuations show the average value of a home on the Kāpiti Coast was $711,465 at the most recent effective revaluation date of 15 August 2020 – an increase of 29.1% since 2017. The corresponding average land value increased by 50% to an average of $389,708. Although these are sharp rises over three years, they are far smaller price tags than you will find in Wellington city.
Meanwhile, Featherston and the whole district of South Wairarapa is due its next rating revaluation in early 2021. “It’s another area where there are regular train services to the capital and relatively affordable housing for first-home buyers and young families,” said Mr McCorry. “There’s also a lot to like about the district for investors.”
It’s worth noting that the way New Zealand’s overheated property market is tracking right now that neither Featherston nor Ōtaki may stay affordable for long, or what effect that the Reserve Bank’s reintroduction of loan-to-value (LVR) ratios will have.
“Guessing what will happen after the Christmas break is fraught with challenges,” said Mr McCorry. “There remains a great deal of uncertainty in the market right now. I’ll continue to watch the market with interest and I’m sure that all first-home buyers and property investors will be doing the same.”