Continued strong demand, in tandem with a limited number of properties being released to the market, has driven continued value growth within the Upper Hutt residential market for eight consecutive quarters according to latest statistics released by the Real Estate Institute of New Zealand (REINZ). The local market recorded a median house price of $440,000 in the June 2017 quarter. The latest quarterly increase was 1.7%. Over the last year however, the increase in the median has equated to $42,000 or 10.6% rising from a June 2016 level of $398,000.
The June 2017 quarter saw 191 transactions completing a reduction 20.4% compared with the same period in 2016 when 240 sales were recorded. On an annual basis, the fall in the number of sales over the twelve months to June 2017 compared with the corresponding period a year prior was limited to 9.8%.
The fall in sales activity can be attributed to the combination of tighter credit conditions, a pre election slowdown and a shortage of inventory for sale across the Wellington region. Wellington’s inventory and the weeks to sell inventory figures have fallen sharply from early 2015 and achieved their lowest levels in the second quarter of 2016. Inventory levels continue to hold at historically low levels with the Wellington region market now having been the tightest in the country for 20 consecutive months.
Upper Hutt is excellently connected to the Wellington CBD via State Highway 2 and public transport network. Consequently, price movements in Wellington City and surrounding residential markets have a direct impact on the housing market within Upper Hutt, resulting with a unity in market trends. However, despite the value increases within the local market, evident over the last two years, relative prices remain almost unchanged and Upper Hutt continues to offer an attractive option for home buyers at more affordable values compared to central Wellington areas.
When the Upper Hutt residential market is analysed on a suburb level, Trentham was the most active by some margin with 172 sales, equating to 20% of all Upper Hutt transactions over the twelve months to June 2017. Trentham was followed by Silverstream and Totara Park. The highest median price was achieved in Mt Marua market, although it should be noted that the sample size was very small with only 5 sales completed over the analysis period.
Rapid value increases in the Upper Hutt residential market has resulted in considerable changes in the distribution of value brackets over the last year. The $400K-$1M value band made up 41% of sales over the year ended June 2016 period, while the largest value band was the $200K-$400K bracket with a 54% share. The order has been reversed over the last year with the year ended June 2017 sales figures indicating that the $400K-$1M value band is now the largest, constituting 59% of all sales over this period while the share of $200K-$400K was down to 37%.
In terms of the share of sales by property type the proportion of stand alone houses has seen a fall over the twelve months to June 2017, representing 81% of all sales. This ratio was 88% in the year ending June 2016. The change was mostly due to the increases in the sales of units which is possibly the consequence of the increased supply of retirement units over recent years in the Upper Hutt market. The share of townhouses, on the other hand, continued the small but persistent growth observed over the previous three years. However, it is important to note that considering the size of the market and the level of new supply, even a single project is likely to substantially alter the distribution of property types sold in the Upper Hutt Market.
The number of new residential building consents issued over the twelve months to June 2017 was 178, up 14.8% compared with the same period a year earlier which saw 155 consents issued. The latest figures has seen development exceeding the longer run average. However given the population growth projected for the area, building at current levels is unlikely to significantly impact the supply / demand balance over the short term future.
SALES HOT SPOTS – Upper Hutt Residential Sale Prices (2017 HY1)