Six consecutive quarters of uninterrupted price growth
The combination of close proximity to Wellington City and lifestyle advantages have long made Upper Hutt an attractive place in which to live.
Commuters have been drawn to the area due to the excellent roading and public transport links which the city has with Wellington’s CBD. Given the strong links between Upper Hutt and Wellington City, it is hardly surprising that trends within their respective housing markets have been similar over recent years.
As is the case within the capital, the Upper Hutt residential property market has witnessed significant value gains over the last two years with the median sales price for the December quarter of 2016 reaching $426,250, a quarterly increase of 4.6% or $18,750 according to the Real Estate Institute of New Zealand (REINZ). When compared to the same period a year earlier, the Upper Hutt residential market recorded an annual price increase of 18.4%. Unlike many markets across the country, which experienced a softening in prices over the third quarter of 2016, due to the additional lending restrictions introduced by the Reserve Bank of New Zealand in order to cool investor activity, the Upper Hutt market was one of the few which retained its upward trend.
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 9.2% compared with the same period a year earlier while the average for the Wellington region as a whole was approximately 12%.
Despite the recent decline in sales volumes, a shortage of listings means that the Wellington Regional housing market is the tightest in the country as illustrated by the latest statistics released by realestate.co.nz.
Within Upper Hutt, pressure on the local market is clearly illustrated by the fact that the average days on market figure recorded in the December 2016 quarter was just 32 days, the lowest level recorded in the last 13 years, down from 46 days recorded in the closing three months of 2015.
The impact of value appreciation is well illustrated by the shift in the number of sales recorded within various value brackets between 2016 and 2015. The surge in prices resulted in a noticeable decrease in the share of lower priced properties in overall sales. The relative share of properties priced $400K and below, which accounted for 65.2% in 2015 sales, fell to 49.3% in 2016. In relative terms the Upper Hutt market retains its position as an affordable alternative to Wellington City. Historical trends indicate that median house prices in the Wellington City and Upper Hutt markets move closely and the proportional prices have remained stable despite the sharp increases experienced over recent years.
Unlike Wellington City, where apartment sales have become a more significant part of the market, Upper Hutt transactions continue to be dominated by the sale of stand alone houses. In 2016 this sector of the market accounted for 84.6% of all sales, down only marginally from the 86.5% recorded in 2015. A small increase in the share of townhouse sales may be an early indication of a growth in the popularity of more affordable, higher density, properties, in the face of the escalating value of stand alone houses.
Number of new residential building consents only 62 dwellings higher than 2015
To date there has been little response from the development sector despite the unprecedented price increases observed in the Upper Hutt Market. The number of building consents for new dwellings were limited to 196, only 62 dwellings higher than the 2015 number. While the number of consents is 45% above the historical average, 196 additional dwellings in absolute terms is unlikely to change the market dynamics in Upper Hutt City which had an estimated population of 42,600 in 2016 according to Statistics New Zealand, a population which is projected to increase to 48,100 by 2043. While stand alone houses continue to dominate new development in the area, the last four years has seen a noticeable increase in the number of consents for retirement units. This reflects the growth in the proportion of the population aged over 65 which is projected to reach 28% by 2043 compared to the current figure of approximately 14%.
SALES HOT SPOTS – Upper Hutt City Residential Sale Prices (2016 HY2)