Wellington City real estate report – August 2018
Every month at relatable, we analyse the stats and take a deep-dive look at the Wellington City real estate market.
Please note: Figures below are generated from REINZ sales up to July 31st, 2018 and ‘Wellington City’ covers Tawa to Seatoun and everything in between…
Reports of the Wellington market slowing down may have been a tad presumptuous…
The median ‘% over RV’ for non-apartment properties in Wellington City hit +50% for the first time ever in July. Owners who had the courage to list their home in winter benefited from an extremely tight market with very few properties available for sale.
“How much over RV are houses usually selling at the moment?”
+50% for Houses (up from +37% in July 2017)
+45% for Apartments (up from +31% in July 2017)
These are the highest figures ever recorded in any single month for either property type, just beating last months records!
What does this mean?
Let’s say your home has an RV of $500k. based on the median % over RV you could be looking at a sale price of $750k (eg. multiply 500 x 1.5). 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.
Did you know? Wellington City rateable values are due to be updated in November 2018. To find out what this means for you, check out this article written by our newest recruit, John Duncan.
What about median sale prices…
The median sale price fluctuates wildly from month to month as you can see in the chart below. The general trend right now is a slow increase over time. However, this can change quickly as we have seen in the past when new funding rules are put in place or big overseas events occur.
The median sale price for non-apartment properties bounced back to $724k in July (up from $671k in July 2017). Meanwhile, apartment properties jumped up to $485k (up from $452,672 in July 2017).
How many sales went through in July?
There were 203 sales in July, made up of the following:
- 47 apartments
- 10 home and income properties
- 115 ‘residences’ this is usually a standalone house or similar
- 17 townhouses
- 14 units
Overall this is well down on the 281 sales we saw in June but up slightly on the 199 sales we saw in July 2017.
This shows there is a severe shortage of property on the market. Nowhere near enough to satisfy current demand. Ask anyone who is trying to buy a home right now – they’ll tell you it’s hard work because there just isn’t much to choose from.
Of the 203 total sales, 23 were houses with at least 1 bedroom (and a floor area of 60sqm or more) and sold below or at $500k (the current welcome home loan limit for Wellington).
This is actually a big improvement on previous months and could (anecdotally) be a sign that a few investors opted to sell up their smaller 1-2 bedroom properties and cash in some capital gains.
How long are properties taking to sell?
Median days to sell Wellington City real estate:
28 days for standalone homes, townhouses and units.
22 days for apartments.
If you own a reasonably attractive property, you are looking at 2-4 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 Wellington City real estate. These selling systems keep properties on the market for 2-3 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?
That black line continues to surge forward. We certainly love our tenders in Wellington. 62 of the total 203 sales in July were sold via tender, with a median result of +54% over RV. A whopping premium of nearly 10% more than the other methods (auction and private treaty).
Bear in mind those number only count the houses that actually sold via the tender process. If a house was initially marketed via tender but didn’t sell at its deadline, then it will end up in the stats for ‘private treaty’ sales.
Auctions came in at +41% over RV, coming in 3rd (out of the 3 categories) for the 5th time this year. The small sample size against doesn’t help though (only 8 out of 203 total sales were via auction).
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.
When will the market slow down?
We will continue to keep an eye on market changes in Australia and whether that starts to affect things over here. If our Australian-owned banks start tightening up funding rules on this side of the Tasman then that could start to have an influence on the market.
Right now though that certainly isn’t happening. Good houses are hard to come by and buyers are fighting hard when attractive opportunities arise.
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?
We have already seen the spring rush start to take hold with a decent number of new properties coming on the market in the last 2-3 weeks. This momentum should keep up as we head towards September so take heart that you will have a few more opportunities in the coming months. 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.
Reminder: 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? Or a few steps up or down to your front door?
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 it’s your first home then you might only be there for 2-3 years, anyway.
If I was a seller, what would I do?
You can still act quickly to beat the spring rush. Every year there is a ‘sweet spot’ at the start of spring and summer. 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.
We have a number of clients looking to sell now with a long-ish settlement (3-4 months). This way they can be a cash buyer in spring when there will likely be loads of properties coming on the market. On top of that, they know exactly how much they have to spend.
It’s scary selling your home before you have a place to move to. But most sellers decide owning zero homes is a lot less stressful than owning 2!
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