Wellington's Sharp Real Estate Downturn

Date: 11 June 2018

The latest QV House Price index is out and it appears that the Capital’s dream real estate run may be feeling the freeze as much as its residents currently are.
Housing market conditions in Wellington appear to have taken a sharp monthly downturn, with residential values falling 1.3% in May and the average residential property value now sitting at $633,759. The statistics tell a very different story to the anecdotal reports of strong market performance, which just goes to show: when it comes to real estate, there’s no arguing with the data, however much you don’t want to believe it. 
It’s the drop in Wellington City itself that’s letting the team down; in fact the 1.3% drop in May is almost entirely due to weak city performance. Suburban real estate performance further out is working hard to offset broader declines. Upper Hutt for example is having an absolute blinder, with 2.9% value growth over the last three months alone. Second place goes to Lower Hutt at 1.4%, ahead of Porirua at 0.9%
When you delve further into the types of properties being impacted in Wellington’s sharp downturn, it’s those at the upper tier of the market (over $850,000) that are being hardest hit. Annual growth in this value range has been limited to just 0.7% over the last 12 months. Compare that to the mid-range market ($650,000 - $850,000) which presented a much stronger 7.1% value growth over the same period. Even properties at the lower end of the market (below $650,000) have performed better than the top tier – albeit with relatively restrained annual growth of 2.5%. 
Head of Research Nick Goodall comments: “While we’re always cautious to read too much into a one month ‘trend’ the turnaround in Wellington City is quite sharp and given there’s supporting evidence of prolonged weakness at the upper tier of the market the softness is more likely to continue through winter. It also brings Wellington in to line with many of the other main centres, in terms of experiencing minimal growth, and given Bank’s prudent mortgage lending standards are nationwide this is not all together that surprising”.
Whether you’re looking to buy or sell, you can get more info on current property market conditions here

Tags: NZ Property Market, NZ Property, Real Estate