Wellington city's average house value exceeds $1 million and the rest of the region isn't far behind

Reserve Bank economists explain why they think housing inflation is almost over.

Property values in Wellington city have exceeded the $1 million mark and the rest of the region isn’t too far behind.

Housing prices have soared since the Covid-19 pandemic and the country's housing crisis continues to see people, especially first home buyers, being priced out of the opportunity to purchase a home.

The latest data, released on Wednesday morning by property data provider CoreLogic, shows Wellington’s housing market continues to set jaw-dropping new records, with the region seeing the greatest rate of growth.

CoreLogic’s House Price Index found Wellington city’s average current value had reached $1,012,163​. In the city’s western suburbs that rose to $1,160,087​.

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The national average current home value was $827,426​.

The Wellington region overall had an average property value of $903,864​ with Porirua’s home values reaching $821,604​. Upper Hutt values were around $748,229​ and Lower Hutt was averaging $798,233​.

Home values in the Kāpiti Coast were $801,137​ while Masterton and Carterton were averaging $546,427​ and $588,000​ respectively. South Wairarapa homes had an average current value of $731,638​.

Overall nationwide, values increased by 1.8 per cent in July, the same rate of growth recorded in June, but down on both May, 2.2 per cent, and April, 3.1 per cent.
ROSA WOODS/Stuff
Overall nationwide, values increased by 1.8 per cent in July, the same rate of growth recorded in June, but down on both May, 2.2 per cent, and April, 3.1 per cent.

In Napier the average current home value was around $700,000 while Hastings was about $692,000.

CoreLogic head of research Nick Goodall said Wellington was impacted by the lack of developable land and there had not been a good investment in infrastructure around the city.

That meant properties in the city were expensive and people were looking further afield, he said.

Price drops would impact on different buyer groups in different ways, CoreLogic’s Nick Goodall says.
Supplied
Price drops would impact on different buyer groups in different ways, CoreLogic’s Nick Goodall says.

There was also a change in attitude as commuting north was becoming easier and people could work from home.

The housing market had not been good to first-home buyers recently with incomes unable to keep up with the price of homes, he said.

“The potential light at the end of the tunnel is that we can expect value growth to slow down. Things won't get worse, but it's not going to be easier.”

Tommy's Real Estate sales director Nicki Cruickshank said the data was not surprising.

“It's virtually impossible to buy a three-bedroom house with one bathroom for under a million in Wellington city,” Cruickshank said.

This led to a lot of first-home buyers moving out to the regions but the company's offices out in the Hutt Valley and Mana had seen a jump in house prices – $500,000 to $600,000 properties in Porirua had jumped to $700,000 to $800,000, she said.

A portion of people wanting to buy in Wellington were having to get help from the bank of mum and dad, she said.

What’s in the Budget for households? Commentators say the short answer is probably not a lot.
ROSA WOODS/Stuff
What’s in the Budget for households? Commentators say the short answer is probably not a lot.

“We sold 80 properties this month. Only 20 of those were under $1m ... the biggest shift was that 10 per cent of those properties were over $2m.” Previously that would have been 1 or 2 per cent.

Cruickshank did not think the housing market would dip, but it would likely slow down.

Property website realestate.co.nz said Wellington, along with Hawke's Bay and the Wairarapa, had reached the highest peak asking prices since its records began 14 years ago.

Wellington's average asking price had a year-on-year increase of 20.5 per cent, its average asking price rising from $689,395 to $830,581.

Hawke's Bay saw a year-on-year increase of 17.5 per cent rising from $595,672 in February 2020 to $699,892 in February 2021.

For the same period, in Wairarapa it increased 12.1 per cent from $577,225 to $647,341.

Nationally, the average asking price for properties last month was $796,789 – costing on average $89,575 more than the same time last year.

Realestate.co.nz spokeperson Vanessa Taylor said the housing market had performed in a way that few people would have expected a year ago.

Taylor said low mortgage rates, a lack of international travel, removal of loan-to-value ratio restrictions and the number of people returning to New Zealand from overseas had contributed to the increases.

RNZ
The Housing Minister says there are so many different figures being thrown around - from 28,000 to 200,000 - that it's impossible to put a specific figure on it (video first published in February 2021).