No let-up in property boom

Asking prices for houses in Masterton rose 16.4 per cent in the last year, according to TradeMe. PHOTO/SUPPLIED

PAM GRAHAM
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The average asking price on TradeMe for houses in Masterton in April was $415,200, up 16.4 per cent from a year ago and one of the top performers in a hot Wellington regional property market.

Wellington’s property market remained red hot in April after the average asking price rose 14.3 per cent or $81,000 year-on-year to $652,950, according to the latest Trade Me Property Price Index.

Head of Trade Me Property Nigel Jeffries says Auckland hogs the headlines, but the Wellington region is the country’s quiet achiever.

Property prices in the capital have gone from strength-to-strength in the past few years and prices in the region haven’t dipped since 2015.

“Much like Auckland, Wellington’s prices have been spreading from the middle out. With growing house prices in Wellington City, we’re starting to see traditionally quieter areas rise in popularity with property prices in the Hutt Valley and Masterton seeing the largest annual growth.”

The average asking price in April in Masterton was up 16.4 per cent to $415,200. In Carterton it was $456,150, up 9.5 per cent.

In South Wairarapa it rose 8.6 per cent to $524,400 and in Tararua 14.6 per cent to $265,050.

David McHattie of LJ Hooker says the market in Masterton is still lifting, especially for properties priced below $500,000. These properties are receiving multiple offers, he says.

He doesn’t believe the market is seasonal anymore, saying properties sell all year round, though January can still be a quieter month.

In Wellington City the average asking price was up 8.6 per cent on last year to $762,850, while Porirua had a 5.7 per cent jump to $634,150.

The average asking price in Upper Hutt reached a record in April after climbing 12.8 per cent to $583,650. The average asking price in Lower Hutt jumped 13.9 per cent to $612,500.

Average asking prices generally slow down as buyers and sellers retreat for the winter but some are picking resilience this winter.

Jeffries says buyer demand is still high and across the region there are 7.6 per cent more houses on the market than at the same time last year.

“It will be interesting to see what the winter Wellington property market looks like later this year. Every indication we’re seeing is that it will buck the seasonal trend and continue to grow.”

Another factor is that the Reserve Bank of New Zealand cut the Official Cash Rate to an all-time low of 1.5 per cent in May.

Westpac economists say the central bank predicts the housing market will get a boost from this, and subsequent drops in mortgage rates.

“We think the boost will be large. Our view is that house price inflation will accelerate to 7 per cent per annum by mid-2020, and the housing market upturn will last longer than the RBNZ is forecasting,” Westpac
economists say.

“This view is not just based on falling mortgage rates – the fact that the threat of a capital gains tax has vanished is another reason to expect a housing market upturn. And, while we continue to take it with several grains of salt, recent net migration data has also suggested that population growth won’t slow as we previously envisioned.”

Jeffries agrees that with interest rates at an all-time low and the capital gains tax off the table there will be a boost for the housing market and “we will likely see even more buyers in the second half of 2019”.

He says small houses continue to be popular.

“Small houses outside Auckland rose a solid 8.6 per cent on the year prior, to $393,400. Nationwide, small houses were the most popular in April, with a 6 per cent increase in average asking price.

“Unsurprisingly Wellington is leading the charge with significant increases for medium and small houses.”