Residential values in the Wellington market continue to experience exponential growth. Prices reached a record median value of $741,000 over the June 2018 quarter, up 2% on the prior March 2018 quarter and up 9% when compared to the same period a year earlier.
Wellington’s median value was just 15% above New Zealand’s median value in 2015. Over the first 7 months of 2018, Wellington’s median value has continued to move higher outperforming the wider NZ market which has showed signs of easing, resulting in the gap between the two values widening to 33%.
Despite a 7% drop in the total number of transactions in Wellington over the June 2018 quarter compared to the prior March 2018 quarter, sales activity remains at elevated levels indicating the continued buyer demand in the Wellington market.
Net migration into Wellington peaked in October 2017 and has since come off these levels however the total net inflow of 2,550 in July 2018 remains over two and a half times the long term average of 1,007. It can be expected that such numbers remain above long term averages for some time due to labour shortages in critical industries such as construction. Continued high migration, tight inventory conditions and historically low interest rates, should continue to support residential values going forward.
A breakdown of sales transactions by price brackets in Wellington Central over the past 3 years shows the growth in values. The proportion of sales for over $1 million dollars continues to increase year on year, now making up 17% of all sales over the year to July 2018 compared to 9% two years earlier. Sales under $400K, on the other hand, continue to decrease, now making up just 10% of all residential transactions in the Wellington market versus 21% previously.
When breaking Wellington down into ‘zones’ the most sought after locations in Wellington can be identified. Western Wellington obtained the highest median value of $807,000 over the year to July 2018. Of the Western suburbs, Karori is the most active making up 53% of all sales and Kelburn holds the highest median value of $1,065,000. Central Wellington obtained the lowest median value of $568,700 however it is important to note that unlike the other zones, 63% of all transactions here are for apartments while just 22% are for stand-alone residential houses.
All selected suburbs have witnessed substantial year on year growth with the exception of Wellington Central. Unsurprisingly, Oriental Bay is the most expensive suburb in Wellington, holding a median value of $1,271,000 in the year to July 2018. Seatoun is the second most expensive suburb over the year to July 2018 and has performed the strongest growth over the past two years with values rising 39% or $336,925.
Market dynamics in Wellington remain tight with the amount of property available to sell continuing to sit at historically low levels. Over the month of August 2018, 982 properties were available to sell on the market, less than twice the historical average of 2,310. At current levels of inventory, the existing stock would sell down in just 7 weeks, illustrating the lack of available stock and strong demand in the market.
In response to the lack of supply and strong demand, the construction sector has ramped up with the number of residential building consents issued over the 12 months to July 2018 reaching a recent high of 1,121. A definite trend towards higher density housing for apartment and townhouse accommodation has emerged with each holding a 41% and 24% share of total transactions respectively.
Over the year to July 2018, the proportion of transactions for different housing types has remained almost unchanged when compared to the prior year to July 2017. Stand-alone residential houses continue to dominate transactions while apartments were the next most frequent, holding a 19% share of total transactions over the past two years.
Wellington Residential Hot Spot Map- 6 Months to July 2018