A solid rebound in sales activity in 4Q 2017 which has continued into 2018 has seen the Wellington market retain its position as one of the tightest markets in the country. We expect these strong conditions to continue for the remainder of the year.
The imbalance between supply and demand in the Wellington market has seen median values continuing their upward trend. The median sell price across the Wellington residential market experienced strong growth over the 2017 year increasing by 9%. Over the June 2017 quarter a record high median value of $680,500 was witnessed, after a slight lull, the median price bounced back to finish the year at the same record high.
In line with national trends, sales volumes in the region declined sharply in the September quarter of 2017, falling by 26%. This can be explained by the uncertainty caused by the election and subsequent change in government as well as the lending restrictions imposed by the Reserve Bank and commercial lenders. Over the December 2017 quarter, the Wellington market has rebounded with sales activity increasing by 46%. We expect to see this level of activity continue as buyers adjust to the new regulatory backdrop.
Wellington’s market dynamics are well illustrated in the graph above which shows the amount of property available to sell, at historically low levels. Assuming no more listings are added to the inventory the existing stock would sell down in just 7 weeks, significantly below the long term average of 18 weeks.
The composition of consents shows the increasing demand for higher density development within Wellington City. While consent numbers for standalone housing has remained almost unchanged over the last four or five years, multi-unit development has increased significantly and now lead the Wellington market comprisingx 66% of new consents. Townhouse consent numbers have more than doubled and retirement consent numbers have almost tripled since 2016.
Apartment intensification within Wellington’s CBD is evident with a number of new developments coming to the market of late. The Victoria street Precinct development is positioned on the corner of Ghuznee Street and Victoria Street and due for completion in 2019. It encompasses two towers including the 75 apartment Southern Tower and 65 apartment Northern Tower. The ‘Pinnacle City Residence,’ located at 160 Victoria Street offers 80 one to three bedroom high end apartments and should be finished by end 2018. The marked increase in apartment development reflects developers responding to current low inventory levels and ongoing strong buyer demand.
Continued price appreciation has been experienced in the Wellington market. Proportionate shares of differing price brackets over the past three years reflect the on-going demand and consequent lift in values. The 2017 year has seen the largest number of property transactions to occur for over $400K, making up 89% of sales. Sales under $400K on the other hand continue to contract, experiencing year-on-year decreases since 2015.
Value and transaction distributions throughout the Wellington market show Oriental Bay and Seatoun holding the highest median sell values of $1,330,000 and $1,125,000 respectively along with the lowest transaction counts of 31 and 39, gaining title as the most tightly held and sought after suburbs in Wellington. Wadestown and Khandallah are other notable high value suburbs recording median values of $860,000 and $853,000 over the 2017 year. Wellington Central received the lowest median value of $380,000 although 47% of sales were apartment transactions.
For the most part, at a suburban level, values have recorded year on year growth. Since 2016, all suburbs within Wellington have experienced increases in sale prices except Mt Victoria which experienced a slight 5% decrease. Suburbs of significant value growth include Seatoun up 25%, Wellington Central up 19%, Karori up 14%, Johnsonville up 11%, Oriental Bay up 10% and Newlands up 9%.
Wellington Residential Sales Hotspots – (2017 HY 2)