Record high quarterly price growth
Located around 40 km north of Wellington, the Kapiti Coast District stretches from Paekakariki in the south through Otaki in the north. Massive infrastructure spending on the regional road network, which includes the Kapiti expressway and Transmission gully, is having a significant impact upon the area. Journey times to Wellington’s CBD and airport will be reduced which is already increasing the appeal of the area to commuters.
The combination of the above along with a sharp uplift in regional values has seen median values in the area reach new high’s over recent months. At the close of 2016 the median sales value stood at $478,000 an increase of 23.8% over the December quarter 2015 figure of $386,250.
While sales activity slowed in the latter part of 2016 the decline in activity was not as severe as that recorded within the wider region. The final quarter of 2016 saw sales volumes declining by 9% compared with the same period a year earlier while the average for the Wellington region as a whole was approximately 12%. Mirroring the trends within the wider region, agency feedback suggests an unprecedented shrinkage in the number of available properties for sale in the Kapiti Coast residential market coupled with a very strong interest from buyers. This is well illustrated by the average days on market figure for the Kapiti Coast which has dropped to 30 days, the lowest figure recorded for the area since the first release of this data by the Real Estate Institute of New Zealand (REINZ) in 1998.
The Kapiti Coast has, for some time, been an attractive retirement option due to its attractive retirement lifestyle which offers affordable homes, a warmer climate and leisure opportunities. People aged 65 and over account for 25% of its population according to 2013 census data, the second highest in New Zealand. This total is projected to increase to 35% by 2043. An equally important segment of the market is the residents who travel to Wellington City for work. Frequent train and bus services and improving accessibility via road make Kapiti Coast a popular choice for those seeking large detached homes at more affordable prices while retaining their employment in the city.
The impact of recent value increases is clearly illustrated by the shift in the proportion of sales which occurred within various value brackets in 2016 compared with 2015. The proportion of properties priced $400,000 and below in all 2016 sales fell to 42.7% from 58.3% recorded just twelve months earlier. Despite the increase in local values, the Kapiti Coast retains its position as a more affordable option compared to Wellington City. An analysis of long-term price movements in Kapiti Coast and Wellington City indicates that their relative prices have remained almost unchanged over the last 10 years with median prices in the Kapiti Coast continuing to be around 30% lower than Wellington City.
Residential sales in Kapiti Coast comprise predominantly standalone residential houses. The clear trend towards smaller sized and higher density property types in many larger urban areas is not evident in the Kapiti Coast market. Despite the sharp price increases, residential houses still make up more than 90% of sales and the change in the proportion of residential houses between 2015 and 2016 is negligible.
Number of building consents up but significantly lower than historical average
The number of new building consents in Kapiti Coast totalled 239 in the year of 2016. This is 27% lower than the 25 year historical average. When compared to 2015, the increase in the number of new residential building consents over 2016 was only 55, despite the tightening local market conditions. A lift in development activity will be required if the local market is to meet the increasing demand for housing in the area. The Kapiti Coast population is projected to reach 59,400 by 2043 an increase of 17% on that recorded as at the census of 2013.
SALES HOT SPOTS – Kapiti Coast Residential Sale Prices (2016 HY2)