A question I’m often asked is: should I buy now or buy later? Clearly, in the current environment of falling property values, tighter credit policies, and rising mortgage rates, there are arguments both ways – and the financial side of things obviously matters hugely. But non-monetary factors are important too, such as: Do you like the street or the area? For investors, it’s often: Is there a good tenant pool?
These issues got me thinking about ownership patterns around the country. Where do people tend to buy and then own that property for a long period of time? There are many different insights that this type of analysis could reveal, but a couple of obvious ones include “longer held” areas potentially facing a relative spike in listings and sales activity in the next few years as the owners age and/or scope for renovations/infill/gentrification.
Across the country as a whole, 27% of properties covered in our dataset were purchased prior to the 2000s* (with 14% prior to 1980). Another 20% were purchased in the 2000s, meaning that the other 53% have been purchased by their owners from 2010 onwards, with 14% since 2020. The first chart illustrates the distribution for NZ and Auckland. As you can see, the overall trends are pretty similar, with both Auckland and the country as a whole skewed towards more recent purchase dates.
However, there are some differences, with the red highlights being periods (2011-15 and 2020-21) where Auckland had relative bulges in purchasing activity and the owners still have those properties. By contrast, over the course of 2016-19, the Auckland market was a bit quieter in terms of property transactions, relative to the rest of the country.
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What about a comparison across some other main centres? The second chart illustrates the position by decade of purchase for NZ, Auckland, Wellington (wider area of City, Porirua, Upper Hutt, Lower Hutt), and Christchurch. Again, the patterns are fairly consistent across these areas, with 35-40% of properties purchased by their current owner in the 2010s, and fewer in the 1980s-90s.
However, Wellington does stand out a bit as a “longer held” area. Indeed, 31% of its properties were purchased by the current owner pre-2000, versus 26% in Christchurch, 27% in Auckland, and also 27% nationally. Put another way, Wellingtonians seem to have a slightly greater propensity to buy and then hold that same property for longer.
For prospective buyers in Wellington, this could potentially create opportunities to track down properties with longer hold periods, where the owner has already seen a large rise in their asset value, and might also be less concerned about extracting every last dollar out of a sale value – with the buyer potentially getting a “bargain”.
We can also break the data down by property type. Let’s focus on the dominant dwelling, a standalone house (as opposed to a flat, apartment, or lifestyle block). At the national level, 27% of houses were purchased by their current owner prior to 2000, the same figure across all dwellings. If anything, Wellington stands out even further when we focus only on houses, with 32% of this property type purchased by the current owner prior to 2000, versus 25% in Christchurch and 26% in Auckland.
CoreLogic chief economist Kelvin Davidson: "Wellington does stand out a bit as a 'longer held' area." Photo / Peter Meecham
So which parts of Wellington specifically are driving this overall pattern? Filtering out any suburb with less than 300 sale records, the chart below shows the 10 suburbs where the most properties (in percentage terms) were purchased by their current owner prior to 2000. Porirua has a strong representation in this list, including Waitangirua and Cannons Creek at the top. Wellington City itself also appears, along with some from Lower Hutt. Upper Hutt doesn’t feature.
In other words, Porirua is a relatively “long held” area, where owners buy and then keep those properties for many years. Interestingly, the suburbs shown from Porirua and Lower Hutt are “cheaper areas”, where the current median value for that suburb is below the median value for the wider city/district as a whole. Clearly, many factors would need to be considered here, but long held and relatively cheap areas could present some buying opportunities.
But let’s look across the rest of the country too. The next chart shows the 10 suburbs with the highest proportion of properties purchased prior to 2000 and still in the same ownership (again with a minimum of 300 sale records). There are no suburbs from the South Island in that list, with the upper half of the North Island quite prominent, but Porirua also popping up again.
At the other end of the spectrum, of course, we can also see the effect of new construction in the booming development areas of the past few decades. For example, only 7% of properties in Wigram (Christchurch) were purchased by their current owner prior to 2000. Rolleston in the Selwyn District has a figure of 8%, and Pokeno in Waikato District is 9%.
So what does this all mean? As noted above, any property that has a most recent sale record dating back to the 1980s (or earlier) and 1990s could tend to have a relatively aging owner, simply because it’s been held now for at least 25 years or so. As that owner perhaps starts to think about their next stage – maybe downsizing in the same area, maybe shifting to a cheaper location – this could start to drive more listings and sales activity in the ‘longer held’ areas, including Wellington in general, but parts of Porirua specifically, as well as certain suburbs around the upper North Island.
Equally, while most owners obviously ensure their assets are kept in ship-shape order, there is still probably a greater likelihood for properties that have been held for longer periods of time to have fallen behind in terms of quality and/or general maintenance. This hints at renovation or redevelopment potential in those suburbs, especially if they are centrally-located to transport or other amenities, and line up nicely with the local council’s focus in terms of infill housing – perhaps as part of the new policy focus on intensification.
It perhaps sounds a little mercenary at face value, but as noted above, buyers may want to look more closely at some of these areas, as there could be vendors who aren’t as worried about driving a hard bargain – given that they’re already sitting on substantial capital gains from many years of property ownership.
- Kelvin Davison is chief economist at property insights firm CoreLogic
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