Across the wider Wellington area, the past six years have brought large increases in property values, following a long flat patch prior to 2015.
Wellington’s key suburbs, including the City, Upper Hutt, Lower Hutt, and Porirua, have seen a 123 per cent rise over the past six years, according to CoreLogic New Zealand (NZ) data.
The boom has seemingly increased in the past 12-months, likely correlating with the post-pandemic market.
Starting with average values themselves, in June 2015 the figure for wider Wellington (defined here as City, Porirua, Lower Hutt, Upper Hutt) was $459,751.
Just six years later, the number has jumped to $1,024,649. This is a rise of $564,898 (123 per cent).
Even the more affordable market in Upper Hutt now has an average property value of more than $850,000.
Corelogic NZ has indicated the primary factors for this rise include strong and broad-based demand (including first home buyers) and a comparatively low new supply pipeline.
Their buyer classification data shows that (like other parts of the country) mortgaged investors have been pretty active, but there’s also been a high presence for first home buyers across wider Wellington.
Part of that dynamic is likely to have been people working in higher-paid Wellington City jobs but commuting in (or working from home) from their first home further afield in Lower or Upper Hutt, or Porirua.
However, the flipside is that affordability has deteriorated markedly and it seems fair to suggest that this could result in a period of outperformance soon giving way to a more sluggish medium-term outlook.
The estimated time to save a deposit is a record-breaking eight to nine years in each of these sub-markets.
Meanwhile, mortgage payments as a share of household incomes are above average too (even despite low mortgage rates), whereas the NZ-wide figure is below average.
In a nutshell, Wellington’s relatively stable economy and employment base, along with obvious supply restraints, will always be a solid base for the housing market.
However, Corelogic suggests since affordability has generally deteriorated more than elsewhere in the country, over the next few years Wellington’s property value growth will tend to underperform the national average.