Wellington real estate update – September 2018
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 August 31st, 2018 and ‘Wellington City’ covers Tawa to Seatoun and everything in between…
Holy smokes, it’s still going up!
The median ‘% over RV’ for non-apartment properties in Wellington City hit +55% for the first time ever in August. In our last update, we recommended owners try to ‘beat the spring rush’ by listing in August and it appears that those who did, benefited a lot!
“How much over RV are houses usually selling at the moment?”
+55% for Houses (up from +38% in Aug 2017)
+48% for Apartments (up from +33% in Aug 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 $775k (eg. multiply 500 x 1.55). 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 from month to month as you can see in the chart below. The general trend right now is a slow increase over time.
Disclaimer: Past performance is no guarantee of future success 🙂
The median sale price for non-apartment properties continued bouncing around to $720k in Aug (down slightly from $724k in July 2018). Meanwhile, apartment properties jumped up to $551k (up from $485k in Aug 2018).
How many sales went through in July?
There were 238 sales in July, made up of the following:
- 43 apartments
- 8 home and income properties
- 147 ‘residences’ this is usually a standalone house or similar
- 19 townhouses
- 13 units
- 8 sections
Overall this is up slightly on the 203 sales we saw in July. Bear in mind that monthly sales figures are likely to increase significantly in the coming months.
Of the 238 total sales, 22 were properties with at least 1 bedroom (and a floor area of 60sqm or more) that sold below or at $500k (the current welcome home loan limit for Wellington). Although 17 of those 22 affordable properties were apartments.
Moral of the story? If you want a standalone home under $500k, you may need to look further afield. Think Titahi Bay (our personal favourite).
How long are properties taking to sell?
Median days to sell Wellington real estate:
25 days for standalone homes, townhouses and units.
24 days for apartments.
If you own a reasonably attractive property, you are looking at 2-3 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 properties. 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.
What is the best way to sell?
Tender. And it ain’t even close anymore.
96 of the total 238 sales in July were sold via tender, with a median result of +57% over RV (the highest level ever recorded). A whopping premium of nearly 10% more than the other methods (auction and private treaty).
Bear in mind that figure only counts 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 +48% over RV. 17 out of 238 total sales were via auction.
Is there a reason for the big difference in results?
Interestingly, the median sale price for properties sold via Tender was $757,500, while the median sale price for properties sold via Auction was $580k. This tells us that more and more salespeople are using Auction as a method to sell homes that fit into the first home buyer price range.
Every mortgage broker I have canvassed has told me this is a bad idea. First home buyers often need to put finance conditions in their offers or struggle mightily to get into an unconditional bidding position. Particularly if they are using kiwisaver money for their deposit, or require a valuation. If you choose to sell a potential ‘first home’ via Auction you could be excluding a number of these potential buyers from the process.
Auctions can be a fantastic selling process when used correctly (think properties with development potential or family homes with character). However, in my opinion, they shouldn’t be used as a ‘one-size-fits-all’ approach. The strategy you choose should suit your property, your target market and your personal situation.
Note: The 3rd category in the chart above, ‘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?
Anecdotally, we are hearing reports that the upper end of the market is starting to slow down, although the stats don’t show anything alarming. There were 63 sales above $900k in August. The median number of ‘days on market’ for these properties was 28. Meanwhile, the median % over RV was 46%. Not too shabby, really.
Hard to say if this constitutes signs of an impending slowdown, but we’ll keep an eye on it.
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?
The number of properties on the market has increased dramatically over the past 2 weeks (up by around 20% since August). The spring rush is on! Now is the time to be out looking and taking action. This is exactly what you have been waiting for all winter. Keep making offers and bear in mind you might still have to miss out on a few houses before you are the lucky buyer that has your offer accepted.
If I was a seller, what would I do?
Try and move quickly if you can. While the number of houses on the market has increased, we are likely still not at the peak by any means. You can expect that to be around late October, early November based on past experience.
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.
If you are thinking of making a move, you can order a selling quote at any time.
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