Wellington apartment demand sinks

19:28, Aug 07 2014

Earthquake-prone buildings and high body corporate fees have seen demand for apartments in Wellington plummet as house prices in the region continue their downward trend, according to valuation service QV.

Valuer Kerry Buckeridge said "demand for apartments is low, particularly as for many the operating costs have increased due, partly, to the increased insurance costs following the Christchurch earthquakes and also the need for earthquake strengthening in some buildings".

"With insurance premiums now beginning to be struck at slightly lower levels than at the peak those buildings still needing to maintain high body corporate levies due to the need to fund deferred maintenance or earthquake strengthening are suffering in the market place."

Harcourts managing director Marty Scott said there were several Wellington buildings that had low earthquake ratings which were hard to sell.

"It helps in those situations if body corps are reasonably well funded and the costs of earthquake strengthening have been identified and funded for.

"There are many that don't fall into that situation and they are hard to shift unless vendors are prepared to discount to fairly significant levels."


On the flipside, Scott said those apartment buildings which had good earthquake ratings were "quite desirable" and did sell.

"The whole market is reasonably challenging but there still remains examples of where people have had outstanding results."

In wider Wellington, house values slipped 0.9 per cent in the past three months but have firmed 1.2 per cent year on year.

The outstanding performer was the Kapiti Coast, where values have risen 0.6 per cent in the past three months and 3.2 per cent year on year.

Buckeridge said Wellington had clearly entered the winter.

"Even those real estate agents who have been optimistic up until now are saying there has been very little activity over the last six weeks and few factors to drive market growth. The Hutt Valley is very quiet, perhaps more so than Wellington."

The slowdown in house-price growth continued in many centres last month as sale volumes tumbled. National property values for July were up 7.6 per cent over the past year and 2.3 per cent over the past three months, QV said.

However, the slowdown in price growth evident for several months continued, and sales volumes are now down between 15 and 25 per cent on last year.

In Auckland, property values rose 2.1 per cent for the three months to July and 11.7 per cent year on year.

But a few areas were starting to lose value, including central Auckland, which lost 1.2 per cent over the past three months, the area's first decline in two years. Auckland valuer Bruce Wiggins said some properties were sitting for several months with either no offers or below-expectation bids.

"This is the first ‘normal' winter the Auckland property market has seen in a few years, where we are seeing reduced house sales and fewer attendees at open homes."

In housing-short Christchurch, prices were up 2.1 per cent for the past three months and 6.5 per cent for the year. But a more normal market was developing as new supply lowered demand.

House values in Hamilton City edged down 0.2 per cent over the past three months but were up 3.9 per cent on a year ago.


Lower North Island QV values and 12-month price change:

Manawatu: $240,994, up 1.5 per cent

Palmerston North: $284,963, down 0.1 per cent

Tararua: $454,570, up 5.6 per cent

Horowhenua: $205,958, up 2.9 per cent

Kapiti Coast: $374,454, up 3.2 per cent

Porirua: $376,399, down 0.3 per cent

Upper Hutt: $333,513, down 0.3 per cent

Hutt: $370,566, no change

Wellington: $535,559, up 1.9 per cent

Wellington Central & South: $546,894, up 2.3 per cent

Wellington East: $569,977, up 1.1 per cent

Wellington North: $472,151, up 2.7 per cent

Wellington West: $610,959, up 0.3 per cent

Masterton: $235,962, no change

Napier: $323,775, no change

Hastings: $297,796, down 0.9 per cent

New Plymouth: $349,480, up 4.6 per cent