Suburb's property values plummet
Wellington has experienced a significant downturn in its housing market, particularly in the suburb of Northland.
According to CoreLogic, property values in Northland plummeted from a median peak of $1.42 million in December 2021 to $985,000 by the end of February, marking a dramatic 30.6% decrease.
This suburb, known for its proximity to Victoria University’s Kelburn campus, has been notably affected by the reduced return of international students, impacting rental demand and property values, RNZ reported.
Wellington suburbs face sharp property declines
Nick Goodall (pictured left), head of research at CoreLogic, noted that suburbs across Wellington were prominent on the list of areas with the largest falls in property values.
This decline was a reversal from the explosive growth during the COVID-19 period, which was fueled by readily available and affordable credit.
However, as interest rates began to rise, the housing market struggled to maintain its momentum, further exacerbated by a softening economy and rising unemployment rates, RNZ reported.
Factors influencing Wellington’s market
Brad Olsen (pictured right), principal economist at Infometrics, highlighted several factors contributing to Wellington’s market difficulties.
These include economic challenges, a past housing shortage that initially drove prices up, and changing demographic trends where more people are moving outwards from the city center, reducing demand in more central locations like Northland.
Additionally, Wellington’s population growth has been minimal, complicating the market recovery.
Recent valuations and economic outlook
Wellington City property owners are facing a stark reality with the latest official valuations recorded on Sept 1, showing that average house values have dropped nearly 25% over three years.
The average residential property value now stands at $1,086,000, with land values decreasing by 36.7% to an average of $621,000. Despite these challenges, some areas like the Kāpiti Coast and parts of Hutt Valley saw marginal price increases in February.
Davidson commented on the improved housing affordability in Wellington, which might be helping to stabilise the market slightly, RNZ reported.
Long-term considerations
The enduring economic constraints, particularly the public sector’s spending limitations, suggest that Wellington may continue to face financial headwinds.
However, the significant correction in housing prices over the past years could potentially reinvigorate buyer interest as affordability improves.
