How is the Wellington property market going late in 2020?
You’ve seen the headlines like this:
Source: interest.co.nz
2020 has been a wild year in many regards, and the property market has certainly been wild as well.
It’s defied expectations; there has been stunning numbers, with unprecedented prices and demand.
The Wellington property market is also experiencing unprecedented times.
This quote from Stuff.co.nz back in July, seems to be only a preview of the rest of 2020:
“The average asking price in the Wellington region in June reached $697,600, an 8.5 per cent increase when compared to June last year.
“In Wellington city, the average asking price was $814,850, a 7 per cent increase,” Clancy said.
However, for 26-year-old Keryn Knight, the current prices make home ownership feel unobtainable, both in Wellington where she lives, and her hometown of Feilding.”
Low stock levels, and low interest rates, have seen the prices rise consistently through 2020.
If we look at the following Median price chart for Wellington, you’ll see the first arrow where the slight dip in prices around Covid is, then a huge upswing since, as indicated by the second red arrow:
Source: interest.co.nz
This from the Landlords.co.nz website this week:
“All 21 of the urban areas analysed experienced value growth over October, with Wellington emerging as the leader of the value growth pack among the main centres.
Values in the Capital’s market grew by 1.7% over the month, by 2.8% over the last quarter and by 11.1% year-on-year. That left Wellington’s average value at $811,099 in October 2020.”
Let’s hear thoughts and notes from some Wellington Property experts:
Michael Anastasiadis – Wellington Mortgage Broker
“Pre-Covid Level 4 Lockdown the housing market was looking steady with incremental rises in housing and interest rates at record lows.
Post-Covid Level 4 Lockdown saw a window of opportunity for about 2 months to buy property.
However, with all the uncertainty and lack of supply, it was missed (so looking back, that was the best time to buy).
As we have seen, it has been record prices over the last few months and that does not look to slow down until the Reserve Bank reinstates the Loan to Value Ratios (LVRs).
Until that happens, prices will continue to skyrocket as there are some that won’t be able to buy once the LVRs are back so they are desperate to buy now.
For 2021 I do see prices stabilising, which will be at new record highs. This is because I expect that the LVRs will knock out some Investors and between late Jan’21 to Easter we will see more listings and more opportunities for first home buyers. I expect that short term interest rates will drop to have a 1% in front of it.
Over the next 12 months about $160bn worth of fixed rate mortgages will come up for renewal at rates lower than what they are currently fixed at. For those that do not keep repayments the same to pay off their mortgage faster, will free up cash for them to spend.
Finally, NZ will still be in a ‘demand and supply’ imbalance. There is not enough housing for all those that want to buy and rent so I am not picking the housing bubble to pop”
Lance Williams – Real Estate Agent https://www.dreamteamnz.com/
Any comments on last month? – an incredible month. I’ve never seen so many buyers out there in the market looking to buy. They are good buyers too and are willing to offer. So most properties had multiple offers on it and all sold for well above what we had appraised it at. So market price does not always mean final sale price. Really important to not under sell your property in this market. Be patient, give it the full marketing campaign for the best results
What do you expect in the next month? – More stock to come on in November before new listings dry up in mid December and we do not go again until after Wellington Anniversary where I expect to see more properties hit the market.
Any hotspots? – Most locations are desirable to buyers but that $700k to 1 million buyer range is where the majority of demand is. So if your house is worth $700k, with the amount of demand you are likely to get $900k plus
Any 2021 predictions? – My crystal ball has been fuzzy all 2020 and I get the feeling 2021 could hold a few surprises but I do not know what these surprises are yet. Take it day by day and live in the moment.
Sinead Diederich – Real Estate Agent https://www.tommys.co.nz/
Any comments on last month?
Average sale price 10% above my appraisal range (which was already pumped)
Huge amount of fomo driving prices
Stock shortage and fierce competition
As soon as the election was over, listings started coming on (7 over 2 weeks), easing the shortage somewhat.
What do you expect in the next month?
All new listings are expected to sell before the end of the month, meaning next month we are back to shortage again…
Hotspots – while entry level properties are still driving the greatest number of enquiries and offers, the activity at the top end has been phenomenal; lots of action in the $1.5 bracket which I put down to returning Kiwis from overseas.
Any 2021 predictions? – unless/until any RBNZ curbing, the escalation seems to me to be ever-increasing; every time we get a burst of listing activity, the demand slows ever so slightly, then these properties sell, FOMO takes over again, and it feeds itself. I have literally never seen anything like it. The following factors are creating a perfect storm. I don’t see any single one of these factors easing in 2021 and I believe it would take probably 3 or more factors to ease for the prices to stop accelerating:
Massive shortage of stock (country wide) 16527 houses for sale in New Zealand today; Vs 55,000 after the GFC in 2008.
Massive shortage locally (even greater than national shortage)
Increased demand from:
- first home buyers getting more than 80% loans
- buyers returning from overseas
- young kiwis who cannot go overseas
- middle aged kiwis who would traditionally look to move to Oz after kids leave home – they are looking to BUY and also NOT looking to sell.
Wealthy buyers with nowhere to go (travel wise) looking to invest,as well as more traditional investors.
- Lower and lowering interest rates
- Ever increasing rents
- FOMO
It seems like the experts feel that unless there is a dramatic shift in policy, the current situation will not change. The market right now is incredibly hot, and people are most certainly missing out on the homes they want, as unprecedented prices are being put up for homes.
We’ll keep you posted with more updates again soon.
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Michael Anastasiadis – Mortgage Broker Wellington – call me – 021 757 269
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