Wellington Scoop

Value of Wellington homes up 47 per cent in three years

Press Release – New Zealand Property Institute
New data shows that the residential value of NZ cities is closing in on $1 trillion. The big jump in value, between 2015 and 2018, is in a new report released by the Property Institute and property market data company Valocity.

In Wellington, the value of residential property rose from around $60,191 billion in 2015 to $88,639 billion in 2018 (47.26%). The most valuable suburb in Wellington is Oriental Bay with a median value of $1.9 million.

The most reasonably priced suburb in Wellington is Timberlea with a median value of $369k.

The Wellington suburb with the biggest movement in value is Moera with an increase of 68% between 2015 and 2018.

The Wellington suburb with the smallest movement in value is Melling with an increase of 19% between 2015 and 2018,

The report shows that the value of residential housing in all the main centres is also up – although the impact of this growth in value is uneven with Tauranga at one extreme with growth of 63.27% and Christchurch at the other extreme with growth of just 11.6% over the 3 years.

In all cases, except Hamilton, price growth in 2017 was the same, or greater than 2016.

Auckland is now worth $469 billion (up from $344 billion in 2015)
Christchurch is now worth over $67 billion (up from around $60 billion in 2015)
Tauranga is now worth over $34 billion (up from around $21 billion in 2015)
Hamilton is now worth around $28 billion (up from around $18 billion in 2015)
Dunedin is now worth almost $17 billion (up from around $12 billion in 2015)

Property Institute of New Zealand Chief Executive Ashley Church says the biggest surprise in the report is the finding that house price growth was stronger in 2017, than it was in 2016.

“There’s been a general consensus that the market has been flattening – but this data suggests that it’s more a case of growth moving away from Auckland to other parts of the country. That’s not entirely unexpected as house price booms in regional centres usually start later than Auckland and continue for a while after a boom in Auckland has ended – but the extent of the strength of those prices, particularly in Tauranga and Wellington, is still surprising”

Mr Church says that the news is both good and bad for the housing market and wider economy.

“We don’t tend to think of residential property as part of the productive sector of the economy – but when you see the growth in house values, like this, as a combined figure, you can appreciate that the country is now ‘worth more’ and that our ‘common wealth’ as a nation has increased. That has all sorts of positive implications for things like lower interest rates, improvements in international indicators, and an improvement in our preparedness for increased numbers of kiwis entering retirement”.

Mr Church says that the figures also mean that many of those of who own property are now wealthier than they were 3 years ago.

However, Mr Church also says that the new data isn’t all good news.

“The report also tells us that houses are now even more expensive – and not just in Auckland – which means it’s even harder to get into the market than it was 3 years ago”.

“It also means that the baseline cost for ‘affordable’ housing programs – such as Kiwibuild – will keep increasing as land and building costs increase. That’s a strong argument to get those houses built as quickly as possible”.

Mr Church says that the figures also mean that the economy has now become even more sensitive to interest rate increases.

“To the extent that this increase in house prices is mortgage funded we’re now that much more susceptible to a major hit on the economy if interest rates were to increase too much over the next few years”.

Mr Church says that the data has several implications for economic and housing policy.

“These figures mean that the speed at which the Reserve Bank removes the Loan-to-Value limits will need to be sped up to ease deposit pressure on first home buyers; the speed at which Kiwibuild is rolled out will need to be accelerated in order to ‘front end’ the construction of homes before costs increase even further; and the Government needs to look harder at policies to increase productivity and wages so that the average kiwi isn’t permanently priced out of the housing market”.

Content Sourced from scoop.co.nz
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