Property values exploding

Wellington house values have rocketed up nearly 50 per cent over the past three years.

New property valuations for the capital show nine suburbs now have an average residential property value of more than $1 million, with some of the sharpest hikes in value occurring in suburbs once considered affordable.

The latest Wellington City Council valuations, produced by QV every three years, shows residential house prices have jumped an average 44.6 per cent.

The average house value in the capital is now $877,000, while land value is $476,000 – a 77 per cent rise.

When council valuations were last calculated in 2015, the city’s average house value increased 6.6 per cent over the three years previous, leaving just three suburbs – Seatoun, Oriental Bay-Roseneath and Kelburn – where the average value exceeded $1m.

This time around, Broadmeadows-Khandallah, Northland, Hataitai, Thorndon, Te Aro and Mt Victoria have all joined the million-dollar club.

Suburbs broadly considered affordable – Tawa, Newlands, Paparangi and Woodridge – all saw an increase of more than 50 per cent. Average house values in these suburbs now exceed $600,000.

But the biggest growth was again seen in the suburbs of Berhampore, Mt Cook and Newtown, where average house values jumped 55.8 per cent, to $860,000.

Those same suburbs enjoyed the biggest value gains in 2015. But back then, the increase was a more modest 10 per cent.

Business properties in Wellington’s CBD also saw strong value growth of 23 per cent, although it was roughly half that of residential properties.

QV general manager David Nagel said prices in Wellington remained fairly flat up until 2015.

‘‘All of a sudden, the market sprung into life in Wellington, following what we’ve seen in Auckland.’’

But Wellington was no Auckland, he said, with affordable properties available in Newlands and Tawa, and viable locations open for housing development in the region.

Wellington house values may yet increase further, as interest rates remained low, migration numbers high and the business sector continued to have confidence in property, he said.

‘‘Without an international event occurring that might change interest rates or property confidence, I think there might still be a bit more juice in the market.’’

Mayor Justin Lester said he wouldn’t want to see the same steep increase in house values in three years’ time.

‘‘I’d like to see a consistent

Residential house prices have jumped an average 44.6 per cent.

increase, but then with more affordable options for those seeking to enter the market.’’

He said council would look to convert 15 to 20 CBD buildings into affordable apartments in the coming decade, adding to a projected council social housing increase of 750 dwellings and the Government’s KiwiBuild efforts.

The new council valuations will be used to calculate an increase in rates, due in July 2019.

Wellington City Council chief financial officer Andy Matthews said ratepayers should not expect to see major fluctuations in their rates bill due to the increase in value.

‘‘This is not a surprise to us, and the council will work through the overall rates increase . . . you’ll see some small variations but we don’t think that’s going to be significant.’’

In Auckland, the city council was in dispute with QV over a short-cuts taken in valuation reassessments and missed two deadlines earlier this year.

Nagel said the error was isolated to Auckland Council processes, and he assured ratepayers the same would not happen in Wellington.

In 2015, there were 1752 objections to ratings in Wellington.