Wellington real estate update – October 2018
Every month at relatable, we analyse the stats and take a deep-dive look at the Wellington real estate market.
Note: Figures below are generated from REINZ sales up to September 30th, 2018 and ‘Wellington City’ covers Tawa to Seatoun and everything in between…
The spring market is in full effect and there are only 10 weeks till Christmas…
If I was a buyer, what would I do?
The number of properties on the market has increased over the past 6 weeks so you have more choice available to you now and possibly slightly less competition on each property.
Have we reached the peak of the market? It’s hard to tell at this stage and trying to time the market perfectly is near impossible.
The best way to protect yourself when buying is to:
- Do your research.
- Buy based on emotion and logic.
- Think long-term. Eg. Can you afford to keep this home for the next 5-8 years?
- Don’t stretch yourself too far. Could you still afford your mortgage if interest rates rose by 2-4%? If not, then it may be prudent to think about reducing your level of debt.
If I was a seller, what would I do?
Try and move quickly if you can. There is still time to sell before Christmas, but to maximise your chances of a good result, you should aim to have your home on the market by mid-November at the latest. If that doesn’t sound feasible, you may be best to wait until late January (after Wellington anniversary weekend).
Remember, you can start the process by ordering a no-obligation selling quote at any time.
Also, read The 5 improvements that maximise value.
Isn’t the market meant to go crazy in Spring?
There was a slight drop in the ‘median ‘% over RV’ for both categories (houses and apartments) in September. It’s hard to take too much away from this until we see what happens over the next few months. However, this could be a sign that the increased number of properties that came on the market in September meant that buyers were spread a little more thinly across the board, possibly reducing competition slightly for each individual property.
Right now though, it is still in a competitive, seller’s market.
“How much over RV are houses usually selling at the moment?”
+52% for Houses (up from +43% in Sep 2017)
+44% for Apartments (up from +34% in Sep 2017)
Please note: New RV’s are coming out early-mid November. So while the figures above can be useful for buyers making offers right now, they won’t be applicable when new RV’s come in to effect. To find out more about the RV update process and what this means for you, check out this article.
What does ‘percent over RV’ 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 $760k (eg. multiply 500 x 1.52). 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…
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 $756k in September (up from $720k in Aug 2018). Meanwhile, apartment properties came back to earth at $435k (down from $551k in Aug 2018).
How many sales went through in September?
There were 213 sales in September, made up of the following:
- 49 apartments
- 11 home and income properties
- 117 ‘residences’ this is usually a standalone house or similar
- 17 townhouses
- 10 units
- 7 sections
Overall this is down from the 238 sales we saw in August. It’s also miles below the 334 sales we saw only 2 years ago in September 2016. I was expecting to see a much higher figure in September. The much talked about ‘spring rush’ hasn’t really turned into a whole lot of sales as yet, although the number of properties for sale is starting to climb.
Of the 213 total sales, 12 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 3 of those 12 ‘affordable’ properties were apartments and another 3 were likely selling in that price range because of weather-tightness issues.
Moral of the story? If you want a standalone home under $500k, you still 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:
27.5 days for standalone homes, townhouses and units.
21 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?
Auction wins the day!
Out of 213 total sales, 10 were sold by auction. Such a small sample size can skew results as you can imagine. 74 properties were sold by tender.
Is there a reason for the big difference in results?
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.
When will the market slow down?
It is going to take a lot more property coming on the market, or a significant decrease in demand to have any sort of serious effect on prices.
Factors that could change the market:
– A major shift away from owning investment property (no sign of that yet).
– Crackdown on lending and outstanding debt from nervous banks over the ditch.
– Sudden ‘brain drain’ exodus to Australia.
– A significant increase in interest rates.
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.
For real estate advice specific to your situation, call Andrew Duncan on 0274286686 or Kahn May on 021931381. We are happy to help.
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