Three Wellington suburbs have been the hardest hit by the downturn in the property market with their average property value now lower than they were two years ago.
But property experts are warning not to read too much into the “snapshot” figures and say there’s nothing untoward happening in Mt Cook, Mt Victoria or Roseneath compared to the capital’s other suburbs other than potentially more investors and fewer first-home buyers in those markets.
Mount Victoria has been the hardest hit suburb with the average property value dropping 4.2% to $1.212 million compared to $1.265m in 2020, according to the latest figures from the OneRoof-Valocity House Value Index.
Roseneath’s average property value also slid 0.7% to $1.525m and Mount Cook’s is down 0.4% to $800,000 compared to the same period two years ago.
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In Auckland, there’s also been a slight adjustment in some of the central city suburbs with Newmarket’s average property value dropping 0.2% to $939,000.
While Grafton, Auckland Central and Wellington Central are also in the danger zone and are hovering close to their 2020 values.
Valocity head of valuations James Wilson said there doesn’t appear to be anything unusual happening in these suburbs that would cause them to drop more than others and any snapshot using low sales volumes can make it difficult to determine whether there is a trend.
Wilson said Mount Victoria and Mount Cook have a lot of owner-occupiers and investors, and in the current market those groups were being more cautious than first-home buyers.
“So what that means when you’ve got suburbs like that which were popular among a certain type of buyer and that buyer is more cautious, it just makes that low sales volume effect even more pronounced and the little stock that does come to market does have less competition for it.
“There’s nothing significantly untoward about those markets that would kind of raise alarm bells if you owned there. It’s just really a combination of current conditions.”
While Newmarket’s fall could be more to do with the fact that in 2020 there were not many properties such as apartments selling at the lower end of the market, he said, so is a direct result of low sales volume and sales composition rather than anything else.
Tommy’s sales director Nicki Cruickshank said the drop in property values in Mount Cook is possibly due to the large number of student accommodation in the area.
“There’s a lot less demand for those rental properties because there’s no investors in the market at the moment so they are being bought by first-home buyers so that potentially could have happened in Mt Cook because they also had really high rises so it wouldn’t surprise me if they had big falls.”
Houses in Mt Cook, Wellington. The average property value for the suburb is down 0.4% on where it was in December 2020. Photo / Getty Images
Pedestrians and shoppers on Broadway, in Newmarket. Homes in the apartment heavy suburb have dropped in value over the past 12 months. Photo / Sylvie Whinray
However, she said the data is not a direct reflection of what is happening in Roseneath and particularly Mount Victoria where some houses have been selling for “incredible money”.
While sales in the suburb are lower than last year, she has not seen prices drop below 2020 levels.
However, with not many properties selling there, one or two distressed sales amongst three or four could be skewing the figures, she said.
Lowe & Co managing director Craig Lowe agreed that Mount Victoria is performing exceptionally well and some recent sales have probably been quite encouraging for the market.
His agency sold a high-end home in Mount Victoria two weeks ago after attracting six offers and selling for a record price on a per square metre rate basis.
Valocity head of valuations James Wilson says low sales volumes make it difficult to track the market. Photo / Fiona Goodall
Instead, Lowe pointed to the small sample size of properties selling in those suburbs making it hard to accurately reflect what is happening in the market because a few lower sales can distort it.
“My gut (feeling) would be that one suburb over that time is not really enough to be sure that’s performed worst.”
While property prices have definitely dropped across the board in Wellington, he said there are no suburbs that really stand out as performing that much worse than others.
Both Mount Victoria and Mount Cook have a mix of quality family homes and investment properties and separating them out by property type would give a clearer picture of what is happening with values, he said.
However, Wilson added the drop in value on paper didn’t really mean anything to people who had bought their properties to either live or long-term investments and could ride the wave out.
“If you are able to afford your mortgage and you haven’t over extended then it really doesn’t mean anything to you in the short-term. Adopt that long-term mindset – turn-off the radio, block out the headlines and just get on with it and I think you will find over a longer-term time period owning the asset will put you in a better position than not owning the asset.”
