Capital’s time to shine

International property consultancy Knight Frank has ranked Wellington number 16 in its latest Global Residential Cities Index.

Auckland is now sitting at number 24 on the index – in which the top eight spots are occupied by Chinese cities, with Nanjing and Shanghai in the first and second spots.

Knight Frank residential research specialist Kate Everett-Allen said that, beyond the rise of China’s top-tier cities in the index, Asia’s other main headline is Wellington’s outperformance.

“Annual price growth in the city (17%) has seen it overtake Auckland (15%) as New Zealand’s hottest housing market, a title Auckland held for eight years.”

After years of underperformance, Wellington’s formerly static market has taken off over the course of this year.

When economist Stephen Dickens suggested that Wellington was set to offer some of the best house price prospects in the country, back in April, the proposition seemed unlikely.

But, over recent months, the capital city has been one of the country’s strongest performers.

According to the latest REINZ data, the Wellington region’s median price hit a record high of $500,000 in November.

This price increase represented year-on-year growth of 15% and, once seasonally adjusted, 1% growth on October.

While REINZ had sales down in November, the data came from the month following the Kaikoura earthquakes which had a significant impact on day-to-day business and life in the Wellington region.

Generally, REINZ had Wellington’s median price trending up, the sales volume trend holding steady and the overall market trend still improving.

REINZ regional director Mark Coffey said first home buyers are becoming more active in the market, although the number of investors has fallen away with the introduction of the new LVR rules.

“But the big question for the market is the impact of the Kaikoura earthquakes and the flow on effect for insurance.

“The market may be a little subdued over the next few months as insurance and other post-quake issues are worked through.”

QV’s November data also showed a strong performance from the Wellington market.

Values in the Wellington region rose by 5.5% over the past three months and by 20.6% year-on-year, to leave the region’s average value at $565,631.

QV’s Wellington valuer David Cornford said strong demand across the market continues to lead to value growth and strong sale prices, but the market is slightly less buoyant than it was.

He too said this came down to the impact of the earthquakes.

However, first home buyers are very active, open homes are well-attended and there is strong demand for new builds and off-the-plan purchases, Cornford said.

“The number of properties listed for sale on the market remains relatively low - however there has been a late spring surge of new listings recently.”

Meanwhile, Trade Me Property’s latest data had the capital’s rental market seeing New Zealand’s second biggest year-on-year increase in median weekly rents.

They rose by 9.5% in the past year, taking Wellington’s median weekly rent to $433 in November.

Head of Trade Me Property Nigel Jeffries said that while the city’s median weekly rent had been rising all year, the past five months had seen an acceleration in growth.

Given the cyclical nature of Wellington’s rental market, he expects to see a strong peak in the market in the first months of 2017.

*Read our recent Regional Review of Wellington South here.