DATE: 20/04/2016
CATEGORY: Awesome news, Blog, First Home Buyer, Home buying, Housing Market, Investment Property, Mortgages, NZ Economy, Property Investment

are Wellington mortgages rocketing skyward like Auckland?

lorange sculptures Wellington the new Auckland? There has been plenty of press of late suggesting that the Wellington property market has become like Auckland’s. But while prices are on the move Wellington has a long way to go before it becomes as over-heated as its counterpart up north.

Growing numbers of Aucklanders now simply can’t afford to buy or rent a house, and they are looking south, as well as east. Investors are looking for better buys too. We’ve experienced the shift first hand, helping record numbers of clients, both those living inside and outside Wellington, snap up property as they continue to grow their investment portfolios.

Johnno Ingerson, Director of Research at Corelogic, recently commented in the New Zealand Herald that buyer demand based on the number of valuations by banks, has surged to record levels right across Wellington, since December 2015, and shows no sign of slowing. And demand is outstripping supply, placing more pressure on prices.

“The total number of properties for sale in Wellington is around half of what it was this time last year, and continues to fall as the number of properties selling outstrips those being listed for sale. This dramatic fall in choice combined with high demand puts the power in the hands of the seller,” says Ingerson.

While there’s no statistical data kept on open homes volumes, we’ve heard scores of stories from clients about properties attracting record numbers of groups, and agents moving tender dates forward and calling interest before the official deadline. Auctions are on the rise too, unheard of for Wellington properties less than a year ago (other than super expensive homes or bespoke gems). That’s a big change in the Wellington market.

Our Wellington pre-approval numbers are at a record high and we are increasingly playing the role of coach and grief counselor to clients who have missed out on their sixth, seventh and even eighth offer. On the flipside, after being in a stagnant slump for so long, many of our Wellington-based clients who made smart buying decisions in the past are enjoying seeing Wellington property prices on the rise. Higher values mean they can leverage off equity and spruce up their pad, or make other smart investments.

“Values in Wellington had increased by just under 10 per cent in the four years to September 2015. Since then they have increased 11.2 per cent, the fastest since 2003. More affordable properties up to $700,000 have increased 15 per cent since September, while those over $700,000 have only risen 7 per cent,” says Ingerson. Amen to that. Our experience with clients confirms he’s 110% on the money with that. It’s great to see some balance in values returning to the Wellington market.

Investor activity has been climbing in Wellington since mid-2013, says Ingerson and they are now picking up 40 per cent of all sales. So while there are definite similarities to the Auckland market with high demand coupled with short supply and investors being the most dominant purchasers, only time will tell if the current rapid rates of value increase in Wellington will persist like they have in Auckland.

While experts differ in their opinions, it is universally agreed that the over-heated Auckland market and resulting housing crisis will require bolder action by the Reserve Bank.

Our view? If you’re looking to buy a home to live in or an investment property in Wellington put your best foot forward. There’s still plenty of good buys to be had.

Provided your ownership plans are mid-to-long-term (five years+) if the yield stacks up, or it offers you a lot in terms of desired lifestyle, we say ‘buy now’. But buy smart. Don’t be hasty, but don’t hold back. There appears to be no sign of the market cooling anytime soon.

 

 


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Posted in Awesome news, Blog, First Home Buyer, Home buying, Housing Market, Investment Property, Mortgages, NZ Economy, Property Investment

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