Lower Hutt has seen prices tumbling more than most but agents are hopeful the Government’s tweaks to the CCCFA lending rules will see more first home buyers return to the market.
Shane Brockelbank, of the Professionals Redcoats, says prices are down “a decent smack” of at least 20% across the board, something he puts down to over-supply and also to the CCCFA rules.
OneRoof’s latest house price figures showed Greater Wellington’s average property value had dropped 2.9% ($33,000) to $1.104 million in the three months to the end of May, with two territorial authorities in the region suffering the country’s biggest declines over the same period. Lower Hutt's average property value fell 5.1% ($53,000) to $985,000, while Upper Hutt's average property value plunged 6% ($62,000) to $972,000.
Brockelbank says despite the change in prices, first home buyers are still finding the market challenging because of lending restrictions and rising interest rates.
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“Every time the OCR goes up 0.5 percentage points I reckon it trims $50,000 off everyone’s budgets. That happened again last month, so homes that were selling for $1m are probably now selling for $900,000, homes at $900,000 are probably selling for $700,000, would be a fair estimation.”
Over-supply in Lower Hutt was also putting pressure on the market. Brockelbank says that there are a lot of rental properties on the market because of last year’s changes to the tax deductibility rules. Many landlords have decided there is no point having a rental, he says.
Suburbs that had seen some of the biggest value gains during the post-Covid boom, such as Wainuiomata, Stokes Valley, Naenae and Taita, were now slowing down, Brockelbank says.
“Often those that experience the highest growth will experience the fastest slowdown.”
On the market for $4.75m: 345 Hebden Crescent, in Kelson, Lower Hutt. Photo / Supplied
Vendors feeling the pain are largely ones who came on to the market in better times who are still expecting the higher prices, but Brockelbank says they are being overtaken by new vendors who have been reading three or four months’ worth of real estate news now and are more realistic the market has slowed.
And some people are reading the new market to their advantage, he says.
“I've got a couple at the moment who said, ‘Look, we want to sell right now because we want to be able to buy in a market that we think is continuing to fall so if we sell we know we are going to be buying in a cheaper market’.
“I think we're definitely seeing more acceptance around where the market is at and certainly lots more buyers wanting to get a home under offer and purchase before the interest rates go up - that's the key driver. “
Open homes have reflected a change is possibly underway, with more people out and about looking. Last week Brockelbank’s agency had about five or six homes under offer, which he says is a good result in a slow market.
While there are suburbs in Lower Hutt made up of former state homes for sale, there are also more expensive homes, such as 345 Hebden Crescent in Kelson, which Brockelbank describes as a rare offering up on the hill comprising three homes on 28 hectares of land.
The property was built in the early 1900s and has been used more recently as an AirBnB. It sits amid park-like grounds and there are harbour views.
This two-bedroom home at 15 Treadwell Street, in Naenae, Lower Hutt, is aimed at first home buyers. Photo / Supplied
Priced at $4.75m, the estate has been on the market for about six months but while there are buyers in that price range this is a big property with a lot of grounds so doesn’t suit everyone, Brockelbank says. “Every couple of weeks we’ll get somebody that wants to have a look. We just need to find the right somebody.”
Tall Poppy agent Suzie Webster says sales in Lower Hutt have slowed, especially among first home buyers.
In Wainuiomata, just over the hill from Lower Hutt central, there were around 180 sales in March 2021. This March there were only about 15, she says.
Webster says the CCCFA has made it difficult for first home buyers to get a loan so price drops weren’t having much of an impact.
She has a two-bedroom home in Naenae for sale price by negotiation and a unit in Fergusson Drive in Heretaunga, in Upper Hutt, listed for enquiries over $529,000.
Pre-Christmas, properties like this would likely have been listed for significantly higher prices, but Webster points out that many homeowners in the region will have made significant value gains over the last five or six years.
Webster says in Wainuiomata, for example, properties were fetching prices in the late $200,000s and early $300,000s five or six years ago, whereas last year those homes were selling in the $700,000s, so some people will still have made perhaps $400,000.
This home at 4/380A Fergusson Drive, in Heretaunga, Upper Hutt, is looking for offers over $529,000. Photo / Supplied
Lower Hutt is a great place to live, Webster says, with diverse suburbs and plenty of sea views.
Wainuiomata has had a bit of a psychological block for people because to get there you have to go over a big hill, but that only takes about three minutes, she says. Once there, there is a lot of land with bush and walking tracks, and also a rugged coastline.
There is also a huge amount of development going on with new townhouses being built and a new mall, too.
“It’s going from not a depressed area but maybe not so desirable, as in geographically, to becoming the only place people can afford. I'm finding a lot of people from northern Wellington suburbs are looking up our way because prices there are so much dearer,” Webster says.
She thinks the Lower Hutt market has reached rock bottom now and says last week more people were out and about at open homes, which is a positive sign.
