Local boom but for rest of NZ it’s ‘wait and see’
WELLINGTON’S HOUSING market is continuing to boom, with the cities of Wellington, Lower Hutt and Upper Hutt posting record median prices in February.
According to the Real Estate Institute of New Zealand, Wellington City’s median price jumped 7.7 percent year-on-year, from $710,000 to $765,000 and was up 8.5 percent on January’s $705,000.
Lower Hutt’s median improved 19.5 percent year-on-year, from $498,000 to $595,000, and was up 19.0 percent on January’s $500,000.
In Upper Hutt, the annual gain was 29.0 percent, from $465,000 to $600,000; there was a 6.2 percent rise between January and February.
Overall, the median price for the Wellington region, which includes Wairarapa, climbed 16.2 percent year-on-year, to $640,000, and 13.8 percent month-on-month.
“The Wellington market had an upswing in February from the more quieter January month,” REINZ regional director Mark Coffey says.
“New listings were up 6.9 percent annually, but total inventory levels decreased 4.4 percent.
“Properties are still moving quite quickly with one of the lowest median days to sell in New Zealand, so agents are finding is hard to meet the demand.
“Savvy investors are looking to increase their portfolios, albeit there are some casual investors who are getting out of the market due to the worries over the upcoming changes to the market.
“The number of properties sold almost doubled (up 92.5 percent) compared to January but ended slightly down compared to February 2018 (down 6.7 percent).
“Overall, there has been a general increase of activity across the board, which is usual for the time of the year, and most likely this increase will continue well into March.”
It took 13 fewer days to sell a house in February compared to a year earlier - the 32-day period was less than the 10-year February average of 39 - but at only eight weeks, Wellington’s inventory of property for sale is the lowest in New Zealand.
The capital was one of five regions that posted record median price hikes in February, while 15 of the 16 REINZ regions had annual increases.
“With house prices continuing to rise at such a pace, this puts even more of a dampener on any notions of New Zealand following in Australia’s footsteps in the short to medium term,” REINZ chief executive Bindi Norwell says.
“Even Auckland saw an increase from January, showing it has returned to the same, stable or flat market we’ve been seeing since April 2017.”
Nationally, however, the number of properties sold fell 9.5 percent year-on-year - the biggest fall in 16 months - at a time when volumes are typically strong.
“Thirteen out of 16 regions actually saw an annual fall in the number of properties sold,” Norwell says.
“Traditionally children go back to school and people return from their holidays and housing activity picks up. However, February 2019 has been an exception to this rule.
“The lower level of sales volumes compared to the same time last year can be attributed to a number of things: the raft of legislative changes impacting the housing market at the moment, the increasing difficulty in accessing finance (despite a record low Official Cash Rate and very low mortgage rates from the banks) and vendors’ pricing expectations.
“What we’re hearing from salespeople around the country is that vendors and investors are taking a ‘wait and see’ approach to the housing market – much like you would normally see around election time.
“This is particularly true in relation to the recently announced capital gains tax proposals from the Tax Working Group.
“Families want to know what aspects of the proposals the Government will look at accepting ahead of next year’s election and what impact that will have on them and their family.”