Has Wellington become a city for the rich?
Expensive housing and declining liveability in Wellington is pushing people out to neighbouring centres, which some say is causing stagnation in the city. Piers Fuller reports
Kayle Petherick and his fiancee moved from the city suburb of Kilbirnie to Hutt Valley earlier this year to buy a two-bedroom, two-storey home. For their money, they doubt they could ever have afforded a similar property in Wellington.
“House prices were drastically in Lower Hutt to pretty much anywhere in the city,” Petherick says.
Their new house at Harbourview is minutes from Melling Station, so their jobs in the city are around the same travelling time as it used to take the bus because traffic through the CBD was so sluggish.
This, by and large, is the Wellington story.
The region’s most recent population data shows Wellington City’s growth almost grinding to a halt while numbers in the outer districts blossom.
Limited land options for new developments and comparatively high prices has stalled growth in many suburbs, while the inner city remain steady due to construction of apartments and townhouses. According to StatsNZ data, from June 2017 to June 2023, Greater Wellington region’s population grew by 7.1%, compared to Wellington City’s 1.7%.
Porirua was up 11.2% over the same period, Kāpiti up 10.8%, Lower Hutt 8.9%, Upper Hutt 11.7% and further afield – Wairarapa grew its population by 15.1% in those five years.
Buying trends shift to outer districts
John Ross, of the Lower Hutt branch of Professionals real estate, said several years ago their internal surveys showed around 8% property buyers in the Hutt Valley were from Wellington, but in recent years that proportion had “tripled”.
“They may not want to leave Wellington, but they will because there is housing elsewhere where they think they can have a better lifestyle, or can afford.”
Angela Jelaca moved Upper Hutt’s Moonshine Valley from Brooklyn just over a year ago.
The reasons for her shift were simple – to get away from the congestion and the cramped lifestyle of the city.
Jelaca said even though she lived a few kilometres from of Upper Hutt City, it was still easier to get to the supermarket than it was driving to the one in the neighbouring suburb in the city.
“The best thing living out here is that you have everything you need out here so don’t need to leave.”
Bayleys Realty Group’s Hutt Valley manager Mark Coffey said they’ve noticed a lift in the number of Wellington buyers looking for property since the Loan to Value Ratios (LVR) limits were tightened in 2021 to counter to the pandemic spike.
“First-home buyers were pushed out to the outer suburbs based on price point.
“We’ve had so many Wellingtonbased buyers buy in Upper Hutt as well as Lower Hutt over the last couple of years.”
Tommy’s Wellington City sales manager Tim Clark said the city’s prices were starting to bounce back quicker than a lot of places.
“The obvious constraints for the central city are physical land, infrastructure and build costs right now.
“We need change, or we’ll be living in a husk. To me, it feels like watching a car crash in slow motion. We can’t and shouldn’t accept this.”
Tenant advocate Luke Somervell, on the state of Wellington City
Developers are finding it pretty difficult to put projects together purely because of the cost.
“They’ll be back and it’s just a matter of when, because we need them.”
Clark said authorities could help by streamlining compliance and making it more affordable.
“Red tape is hugely expensive, which is something we can control more than the cost of product and labour.”
Housing is affordable, if you’re wealthy
CoreLogic’s Housing Affordability report published last month showed though Wellington City was not as bad as some other main centres in terms of affordability, that was mainly because the average household income was comparatively higher.
Once again, showing the city was becoming the domain of the more welloff.
The average annual household income in Wellington is $164,000, meaning takes 44% of people’s incomes to afford repayments on an average house valued at just over $1 million.
Wellington’s average incomes are on a par with Auckland’s, but significantly higher than Tauranga and Hamilton, where households are earning around $120,000 on average.
Renters want ‘square deal’
Marilyn Makatea is a renter who left Wellington because she couldn’t afford to live.
She moved from Kilbirnie to Paraparaumu, where she found accommodation for $200 a week less than she was paying in Wellington.
“I didn’t have a choice really. Everything was just too expensive for me.”
Kāpiti Coast suited her because she was able to find higher quality housing and she enjoyed the lifestyle.
“In Wellington you could catch the train, but you couldn’t guarantee that the buses would be on time for work.
“It’s beautiful in Paraparaumu. The people are nice and there is a lot of scenery there.”
Luke Somervell, of tenant advocacy organisation Renters United, said the recent battle over the recommendations of the Independent Hearings Panel report on intensification showed how disconnected parts of society were.
“There’s a big divide between people who currently own property and people who are renting and there doesn’t seem to be much of an understanding how tough it is for renters and how desperate people are.
“I know homeowners are really worried about change, but I would just say there’s a huge price that’s being paid to prop up things as they are. And renters are paying the price.”
He’s noticed a shift in young people staying home instead of going out in the city.
“It’s not good for business when people are spending more than a third of their income on rent.
“It has such a flow-on effect and it's connected to so many things. We need to stop pretending this situation is normal or sustainable in any way.”
It felt like the struggles were falling on deaf ears, he said.
“The idea that a lot of people have of the Wellington of the past is slowly dying out. We need change, or we’ll be living in a husk.
“To me, it feels like watching a car crash in slow motion. We can’t and shouldn’t accept this.”
Upshot of upzoning amendments
Those in favour of more intensive housing were buoyed by the council’s recent vote to amend many parts of the Independent Hearing Panel’s recommendations.
The panel had recommended greatly expanding heritage protection areas, which would have hampered intensification.
Instead, the council chose to amend the district plan, which would allow for more intensive development in many suburbs.
Rebecca Matthews was one of the councillors spearheading the amendments.
“Wellington prides itself in being a compact city, but actually, we’ve really helped contribute to sprawl.
“What I’ve seen since I’ve been on council is ‘population denialism’, and from some quarters, a wish that people wouldn’t come, which has become a self-fulfilling prophecy, as over many we have refused to let the city grow.”
Matthews said some of the character protection rules were inhibiting growth and many people were living in larger houses than they needed.
Matthews said student numbers, aged care facilities, workforce type and healthcare were all being affected by Wellington’s changing demographics due to lack of affordability.
“All of those things we can help turn around, because people want to live here. They love living in Wellington.”
Intensive solution
Prominent developer Ian Cassels said Wellington was a great place for inner city living and bringing more residents to the centre would solve a lot of problems.
“We need to play to our strengths and our strengths are an intensified, enjoyable, culturally sustainable and interesting city. We have a good place to be and live. “It’s rich in terms of what it can provide.“Cassels said more residents would utilise the services that were already in place for the daytime working population, they would bring more life and vitality to the CBD and would strengthen the ratepayer base. “That doesn’t put a strain on anything because as the office workers decline a little, residential will improve, and some of the residential people will turn into office workers.”
In the past 25 years the residential population of the central city has increased by around 20,000 people.
That amounts to around 45,000 people now living in Te Aro, Mt Cook, Thorndon,
Oriental Bay, Kelburn and the CBD. The residential population in the CBD doubled from 8000 in 2003 to 16,000 in 2018, according to Census data.
The city as a whole has grown by about 35,000 from 2003-2023, so a fair chunk of the growth was in the central area.
Cassels said was more potential to convert some office space to residential living and there was still plenty of scope for new developments.
“Cheaper than building houses in the suburbs – cheaper because you’re not putting in expensive infrastructure.”
Cassels questioned the council and central government’s focus on large, expensive projects when there were other ways to improve the city with that money.
“We should be doing all those things which tend to make it easier to live and work, without the distractions of massive transport systems and grand plans that just get in the way of sensible choices,” he said, alluding to Let’s Get Wellington Moving, Golden Mile and cycleway projects.
“We’ve got projects that won’t produce any immediate benefit for Wellington being pushed to the front of the line, when they should really be at the back of the line.”
Councillor criticises council
Wellington City councillor Diane Calvert said people were moving out of the city because they were unhappy with its current direction and they “got more bang for their buck” elsewhere.
“Our council has spent too much energy pushing for things that the majority of people don’t want, but also not making it liveable. With affordability, also comes liveability.”
Calvert said there had been many council plans and development frameworks over the years that didn’t produce results.
“We put all these plans up and we never enact them.”
She believed more focus needed to come back to water and wastewater infrastructure instead of big transport projects.
Public sector cuts warning
Simon Arcus, of the Chamber of Commerce, said looming public sector cuts were another factor that could suppress growth.
“If you want to own a home, you really have to have two professionals working and there’s a big risk coming up that jobs will be harder to come by and the private sector can’t necessarily absorb them.
“That’s a big issue because that then leads to people leaving. The geography of the city means there’s a limit to how much can be developed viably and that pushes up housing prices and affordability.”
Arcus also questioned whether council should be spending so much on projects such as cycleways when there was no end in sight for rates rises.
What do you think? Email editor@thepost.co.nz