Turns out winter is a great time to sell in Wellington
Every month at relatable, we analyse the stats and take a deep-dive look at the Wellington real estate market.
Please note: Figures below are generated from REINZ sales up to June 30th, 2018 and ‘Wellington City’ covers Tawa to Seatoun and everything in between…
It turns out winter is still a good time to sell…
Leading the charge this month is the oft-requested ‘median % over RV’. While rateable values are an unreliable guide to market value, many buyers still focus on their relation to actual sale prices when trying to decide where to pitch their offer.
“How much over RV are houses usually selling at the moment?”
The answer right now (based on June sales) is
+48% for Houses (up from +37% in June 2017)
+44% for Apartments (up from +24% in June 2017)
These are the highest figures ever recorded in any single month for either property type.
What does this mean?
Let’s say your home has an RV of $500k. based on the median % over RV you would be looking at a sale price of $740k (eg. multiply 500 x 1.48). The variation between houses is huge though. A recent sale of ours went more than 70% over its RV so don’t take these figures as a hard and fast rule.
If you are wondering how accurate your RV is, get in touch with us. We are happy to talk it through any time.
What about median sale prices…
On the graph below, it looks like the median sale price took a dive in June, dropping to $689k (after registering $765k in May) but when you dig deeper, there were some reasons for this.
24 sales went through as part of one development at 36 Tacy Street, Kilbirnie. These sales all ranged in price from $640 – 680k. Thereby pulling the median down (there were 281 total sales in June).
It’s always important not to dramatize these results too much. I saw an article published by QV a few weeks ago which labelled a 1.3% monthly value adjustment as a “Sharp real estate downturn”. Is that really warranted?
Meanwhile, the median sale price for apartment properties bounced back slightly $435k (up from $415,000 in May). There were only 36 total apartment sales in June (down from 54 in May) so the jury is still out on how much we read into this until we start to see stats from the bumper spring months of September to November.
How many sales went through in May?
There were 281 sales in June (36 of those were apartments). This is down slightly from the 284 sales we saw in May but up on the 269 sales we saw in June 2017.
Of the 281 total sales, only 12 were houses with at least 1 bedroom (and a floor area of 60sqm or more) and sold under $500k (the current welcome home loan limit for Wellington).
This continues to illustrate how hard it is to find an affordable home in Wellington right now. It also highlights how out of date the welcome home loan limits have become. Buyers operating with $500k or less are now forced to look further North, to areas like Ascot Park, Ranui Heights and Titahi Bay to secure their first home.
How long are properties taking to sell?
Median days to sell – Wellington City:
25 days for standalone homes, townhouses and units.
30 days for apartments.
If you own a reasonably attractive property, you are looking at 3-4 weeks of total market time to find out what it’s worth in the current market.
The only reason the ‘days to sell’ numbers aren’t even lower is the prevalence of deadline sales and Tenders being used to market properties in the Wellington area. These selling systems keep properties on the market for 3 weeks when they might otherwise sell faster. But as we have noted before, that extra time on the market can really benefit sellers.
How are those Tenders tracking?
Look at that black line surging forward! We certainly love our Tenders in Wellington.
That method stayed consistent in June, securing owners a median result that was +52% over RV (equal to May). Auctions came in at +44% over RV, coming in 3rd (out of the 3 categories) for the 4th time this year. The small sample size doesn’t help these stats though and from my experience Auctions can be an extremely effective way to sell if you have a property which you are confident can attract 5+ cash buyers in a 3-week marketing campaign.
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 +45% above RV, up 5 points from May.
We often see the results in this 3rd category improve in the middle of winter when there is hardly anything on the market. Even the houses that didn’t sell at Auction or Tender start to get really good results with so little competition around.
When will the market slow down?
Right now we can’t see any sign of a slow down on the horizon. For any correction to occur we would need a major rise in interest rates, a massive change in funding availability, a biblical exodus from our Capital City, or a sizeable increase in supply.
With the shortage of developable land available – that 4th option simply isn’t going to happen in Wellington any time soon. As for the rest? No one really knows when an international event might trigger a banking freakout, so as usual, it pays to make sound decisions when buying and ensure that you have strategies in place to handle things if interest rates were to rise 2 – 4% in future.
If I was a buyer, what would I do?
Take heart in the knowledge that you will see a big increase in the number of properties coming on the market in the next few months. As we head into spring the numbers will shoot up quickly and you will have much more choice on your hands. Keep making offers and bear in mind you might have to miss out on a few houses before you are the lucky buyer that has your offer accepted.
Have another look at your non-negotiable list. Could you make a 2 bedroom home work? Will it actually matter if you buy a house attached to another property? Or end up with a shared driveway?
Often these things can seem like a total turn-off when you are looking for your dream home. But sometimes it’s better to settle for 80% of what you ideally want and thereby get into the market. Rather than hold on for the perfect house and get frustrated when you miss out time and time again.
If I was a seller, what would I do?
Now is the time to act. Every year there is a ‘sweet spot’ at the start of spring and summer, where buyer interest is heightened. The weather starts to improve, but every other potential listing hasn’t quite hit the market yet (so you have less competition). If you have total flexibility with timing, we encourage owners to go on the market in August / September or late January / early February.
If you own a home already, I would follow the advice above and ideally sell in August with a long settlement (3-4 months). This way you can be a cash buyer in spring when there will likely be loads of properties coming on the market.
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