Housing market heats up
It might be cool in the city this summer but Wellington’s housing market is reaching boiling point.
Experts say on top of the traditional buying season, this year there are other factors adding pressure to the market: a rise in mumand-dad investors buying property for children headed for university, halts on the capital gains tax prompting would-be buyers to jump back in the market, and Auckland investors turning their eyes to Wellington.
Pressures to find the right roof to go over your head will be worst in late-January to March, typically the busiest time in the property market.
For most first-home buyers, the city itself is unaffordable.
Data from homes.co.nz show the median price first home buyers can expect to pay in Wellington is $640,000. The median house price overall for Hutt City is $589,000 and in Porirua it is $620,000.
But if you think renting would be a better option, rental advocates warn that supply and demand issues have not eased.
Every year the city sees an influx of interested renters as the city’s universities welcome back students for the beginning of the academic year. But it means those students looking outside the confines of university halls are fighting it out with working professionals and families.
They all have the same goal – to secure suitable, affordable housing.
The latest Statistics NZ data showed rental prices were up 3.4 per cent year-on-year in December. The latest data from Trade Me showed the median weekly rent in Wellington was $550 in November, up 10 per cent year-on-year. That crept up again for those choosing to live in Wellington City with a median weekly rent of $585 per week, up 6.4 per cent.
Demand for rentals was up 14 per cent.
THE MARKET FOR BUYERS
Lisa Snow has been in the real estate game for a decade but this is a first. She’s selling a two-bedroom place in Newtown. RV: $580,000. Size: 36 square metres.
The current owner built the home in 2003 and Snow said at the time, the owner was often told they were crazy for building something so small.
But that’s no longer the case. At the open home on Thursday, Snow had 40 groups of people through, something that was ‘‘unheard of’’.
There was a mix of interested people: older couples keen to downsize, single parents. But mostly, firsthome buyers on the hunt. ‘‘It’s insulated, modern with a solid foundation. Most of the other stock in Newtown is 100 years older than that.’’
She said it was up to the buyers how much it would sell for, but expected it to go for above its RV.
Listening to homes.co.nz chief data scientist Tom Lintern, the cost – if not necessarily the size – is pretty well in line with Wellington prices for first-home buyers.
The website aggregates public information on houses – size, location, along with sales history – and can use data to follow market trends.
‘‘We have what we call our First Home Buyers Home Estimate. It’s the lower quartile value of properties in an area and in Wellington city, the lower quartile value is $640,000.’’
The median estimate for houses in the city overall in January is $794,000, he said. ‘‘That’s up 7.3 per cent from this time last year.’’
Tommy’s Real Estate sales consultant Nicki Cruickshank said
January was always a busy time for the market, until new stock comes in around February and March.
‘‘We’ve seen a lot of increase in town houses and apartments in the inner city that have been selling off the plans and selling well.’’
‘‘It’s all supply and demand and at the moment demand is still higher than supply.’’
In terms of first-home buyers, they were facing competition from different investors, she said.
‘‘The mum-and-dad investors that all jumped out when the capital gains tax was a threat are all starting to show signs of coming back,’’ she said.
Alongside that, January was also the time parents from outside Wellington would look at buy an investment house to rent to their children studying at university.
‘‘You’ve also got Auckland investors coming back into the market.’’
Craig Lowe, a founding partner in real estate agency Lowe & Co said the company had a strong start to the year and had seen trends similar to Snow’s Newtown property.
On his company’s books, they had a two-bedroom, 90-square metre cottage in Berhampore, which sold for around $1,000,000 he said.
‘‘It really does hit home how twobedroom cottages on tiny tiny sections can go for a seven-figure number, now in Berhampore which was traditionally a lower socioeconomic area.’’
‘‘[But] people buy lifestyle. They buy what they can touch and see and live in.’’
For families and first-home buyers, that might mean looking in the outer suburbs.
‘‘What we’re seeing now is a real gentrification of the northern suburbs and all the way out to
Porirua district,’’ he said, ‘‘There’s more land, more opportunity for development.’’
THE MARKET FOR RENTERS
Website showed 163 properties listed to rent in Wellington City on January 17.
The top-priced place was a threebedroom, two-bathroom flat in Thorndon. The asking price was set at $2500 per week.
The lowest-priced rental was a one-bedroom, two-bathroom unit in Johnsonville at $130 per week.
The average rental price for the 163 listed properties calculates to $653.66 per week which is, anecdotally, $68.66 more than Trade Me’s median for rentals in
Wellington City for November.
Wellington Property Investors’ Association president Richard Bacon said the capital’s rental squeeze would continue until more housing was built.
The city had significant supply and demand issues. ‘‘It’s always the same. Nothing has changed, it’s the same as last year,’’ he said.
He suggested the council encourage new builds to help with supply issues by reducing red tape around consents.
That would be one way to help ease the annual pressure of people looking to find the right rental home, Bacon added
But Victoria University of Wellington Students’ Association president Geo Robrigado was concerned the university was downplaying the city’s housing crisis.
He pointed to Victoria University of Wellington’s rental market snapshot, which stated ‘‘media buzz around rental accommodation, particularly from January to March’’ was ‘‘not always accurate or reflect what we see at the university’’.
Robrigado said the flat hunt for students was just starting but already this year’s students were sharing their concerns.
‘‘We really see that there’s a housing crisis here in Wellington.’’
Students were couch surfing at their friends’ places and international students were jumping between hostels and backpackers to get a roof over their heads.
‘‘It’s getting more difficult ... Not just for students but for the entire community as well.’’
Students who had already secured a rental in previous years were paying rent over the summer, despite not being in the city, to ensure they had a place to go back to, he said. But that added financial pressures.
Robrigado said he chose to stay in his family home while he studied and cope with a long daily commute to the university, somewhat due to the rental market.
‘‘I would not be surprised if there were many people like me who just decide to stay at home so they could keep the costs down.’’
In an emailed statement from the Victoria University of Wellington, a spokesperson said it did not downplay the difficulties of the housing market.
‘‘The university is concerned about the pressure that the rise is placing on rents and therefore on low-income students seeking suitable accommodation,’’ the statement said.
Students who arrived in Wellington early to start their flat search could stay at Boulcott Hall or Te Puni Village before the school year began, and in some cases it offered hardship grants.
‘‘While we know the beginning of the year can be very difficult for flat hunters in the capital, the trend in recent years has been that by early in Trimester 1, many students have found accommodation.
‘‘We continuously monitor the situation through our accommodation service and with the students’ association.’’
The university was looking at investing in new accommodation, particularly for returning and international students.