Wellington market report: May 2018
Every month we analyse the stats and take a deep-dive look at the Wellington real estate market. Be sure to like our page on facebook to get tips, advice and updates as soon as they are released.
Please note: Figures below are generated from REINZ stats up to 30th April 2018 and ‘Wellington City’ covers Tawa to Seatoun and everything in between…
Median sale price peaks again!
The April median sale price for non-apartment properties (houses, townhouses and units) was the highest ever recorded in Wellington, coming in at $765,750 (the previous high was $744,373 in Feb).
There is still a serious level of demand out there for good properties (we had 33 groups through our new listing in Paparangi on Sunday) and the market continues to reflect this with a gradual increase in value.
Meanwhile, the median sale price for apartment properties dropped to $485,500 (down from $523,000), reverting back to their usual level over the past 12 months. Anecdotally, most property investment experts believe you see better capital growth in houses as opposed to apartments as it is essentially ‘land’ that goes up in value, not the buildings that are on it. So with that in mind, you would expect to see the gap between the two lines above slowly increase over time.
In saying that, apartments are usually bought for lifestyle reasons, eg. Being close to the action, or saving time/money on maintenance. Capital growth isn’t always the main driver in that market.
How many sales went through in April?
There were 290 sales in April (56 of those were apartments). This is down from 344 sales in March and also down slightly on April last year which produced 302 sales. It’s normal to see a slight drop off from March to April as we hit daylight savings and some owners choose to hold off until Spring.
Of the 234 sales that weren’t apartments, only 18 of them sold under $500k (the current welcome home loan limit for Wellington).
This stat highlights how hard it is to find an affordable home in Wellington right now. It also highlights how out of date those welcome home loan limits have become!
How accurate are Wellington Rateable Values?
Pretty consistent this month. The median % above RV for houses, townhouses and units dropped 1 point to 45%. Meanwhile, apartments bounced back 7 points to +39% over RV.
Note: We see more fluctuation in the apartment market due to the smaller sample size (56 sales in April).
How long are properties taking to sell?
Median days to sell – Wellington City:
27 days for standalone homes, townhouses and units.
37 days for apartments.
Starting to slow a little bit. This will be an important stat to watch in the coming months. When the market starts to turn, a jump in median days to sell is often the first warning sign.
How are those Tenders tracking?
Tenders bounced back to 49% over RV and Auctions took a dive to 39% over RV but I wouldn’t read too much into that last figure. There were only 13 Auction sales in April and many of these were apartments (which usually sell closer to their RV).
Note: The 3rd category ‘private treaty’ includes everything that wasn’t sold via Auction or Tender, including properties marketed with a price, BEO, deadline sale, by negotiation etc. This category will include properties that were originally marketed as Tenders or Auctions but didn’t sell by the initial deadline. The median for these sales was +42% above RV, down 1 point from March.
What I’m watching going forward.
It’s all about inventory levels. In Wellington, we have 8 weeks worth of property on the market. This means if no other homes became available for sale, it would take 8 weeks to sell everything that is already on trademe, based on average monthly sales volumes over the past year.
For comparison’s sake – in Auckland, where things have well and truly turned and we are now seeing a buyers market, they have 18 weeks worth of property available for sale.
I’ll keep you posted on these numbers moving forward. Many experienced property experts say that the Wellington market historically follows Auckland, 6 months behind. Based on that we should expect to see a big slow down in the coming months. Personally, I can’t see things turning that bad anytime soon, but I could be wrong!
If I was a buyer, what would I do?
Stick to your guns and keep searching. Keep making offers on properties you like and try to be as aggressive as you can.
What I wouldn’t do is by ‘on the rebound’. That’s where you miss out on a property, get sick of looking and offer a whopping price on the next decent house you see because you are just ‘over it’.
Don’t make that rookie mistake or you will end up over-paying. If you miss out on a home, take a deep breath, take a few days off looking at trademe, do whatever helps you ‘de-stress’ and then get back into it. Trust your gut on value and whatever you do, don’t give up!
If I was a seller, what would I do?
Check out this case study of a recent sale we had in Broadmeadows. There are a few key ingredients that go into a successful sale: Effective digital marketing, staging, providing reports up front (builders & LIM). Decent agents help too 🙂
If your property gets a reasonable amount of sun and you have a heatpump (or better yet, a woodburner), then selling in Winter is definitely an option for you. Allow yourself enough lead time to snag a sunny day for photos and if you are selling a soon-to-be-vacant investment property, consider investing in staging to make your home as inviting as possible.
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