After a runaway property boom that lasted 18 months, Wellington’s property values have hit the brakes.
And CoreLogic research analyst Kelvin Davidson has suggested there could be a further flattening of the market in the capital.
Davidson says in a press release: “We’ve seen values dip by 1.2 per cent since February, compared to increases of 2.9 per cent in Upper Hutt, 1.4 per cent in Lower Hutt, and 0.9 per cent in Porirua.
“This soft patch for the city has already been much more noticeable than the lull of June to August in 2017.”
The analysis is based on the CoreLogic e-valuer measure, which gives a market value for all properties at any point in time. It then takes the median value of these for each suburb at the start of each month.
Davidson says not every part of Wellington is sluggish. Aro Valley has seen average values rise by 2.2 per cent over the past three months, and another seven suburbs have seen gains of 1 to 2 per cent.
The suburbs that were weakest in the past few months seem now to be those in the higher price bracket.
Five of the 10 suburbs where prices have fallen the most, such as Seatoun, Karaka Bays and Mount Victoria, have values above the Wellington average. Wilton and Miramar have values slightly below the city’s average, but have also seen falls recently.
It seems that the higher priced properties are the worst-hit, with mid-range properties faring better. Houses over NZ$850,000 have seen gains of only 0.7 per cent over the past year, but those in the NZ$650,000 – NZ$850,000 bracket have risen by 7 per cent.
Say Davidson: “In reality, Wellington’s slowdown shouldn’t come as much of a surprise. After all, as we’ve already seen in Auckland, as prices rise ever-higher and affordability deteriorates, a natural handbrake emerges. This seems to be showing up in the higher-priced suburbs.”
He says tougher bank rules are also having an impact. Banks have been asking, could the borrower afford their repayments if the mortgage rate was to rise to 7 per cent.
He predicts a further flattening out for Wellington values, especially since activity levels have also cooled lately and first-home buyers have pulled back a bit.
First published 21 June 2018
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