Wellington remains one of the country’s most expensive cities to break into, with few suburbs showing up with price points friendly to first home buyers.
Figures from OneRoof’s house price report for June show that just seven suburbs, out of 56 in the capital, have an average property value of less than $1m.
The majority of the Wellington’s sub-$1m club are small and have recorded few sales over the past 12 months, but three, Wellington Central and Te Aro, are relatively vibrant markets where first home buyers are in with a chance.
Wellington has the fewest sub-$1m suburbs of all New Zealand’s major cities, according to the figures. Christchurch has the most with 82 out of 113, then Hamilton with 26 out of 41, then Auckland with 28 out of 276.
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The sub-$1m Wellington suburbs are Wellington Central, Pipitea and Te Aro, which are all in the central city; then Grenada North, near Tawa; Makara Beach, a tiny community out past Karori; Glenside, another tiny community near Tawa; and Ngauranga, a small suburb at Ngauranga Gorge.
Wellington Central has the lowest average property value, at $668,000, a reflection of the suburb’s apartment-heavy real estate market.
The market slowdown has lowered bar for first home buyers in Wellington, with the city's average property value dropping 2.4% ($32,000) to $1.288m in the three months to the end of May.
A two-bedroom terrace at 2/52 High Street, in Island Bay, Wellington, is seeking offers over $895,000. Photo / Supplied
A two-bedroom apartment at 6/161 Glenmore Street, in Kelburn, is looking for offers over $485,000. Photo / Supplied
Tommy’s Real Estate principal Nicki Cruickshank said first home buyers were having to spend more than $1m at market peak last year but the downwards shift in the market meant that most were looking for homes in the $700,000 to $900,000 range.
Much of the change was being driven by the CCCFA, which had reduced the amount buyers could borrow, and rising interest rates.
“Most of them roughly are getting approved for $200,000 less than what they were previously approved for,” she said.
First time buyers were a bit more gung ho a year ago and willing to spend more, she said; now they were happier spending less. They also have a lot more choice than first home buyers did a year ago.
While June is usually the agency’s quietest time of year, listings were up 50%-60% compared to last year, Cruickshank said.
Having said that, there still isn't a lot available for under $1m: “They can buy one- or two-bedroom apartments. In some suburbs you can get a two-bedroom semi-detached townhouse or house, or in some rare occasions a very rundown three bedroom house.”
Some examples of under $1m possibilities include 2/52 High Street in Island Bay, a townhouse with views on for enquiries over $895,000.
Tommys also has a two-bedroom apartment in Kelburn on for enquiries over $485,000 near the university and CBD. And in Haitaitai, a four-bedroom house with two bathrooms is on for enquires over $965,000.
Grant Henderson, Bayleys regional general manager, said there were more opportunities for first home buyers outside of the capital, noting that two-bedroom homes in Upper and Lower Hutt could be picked up for less than $700,000.
A four-bedroom home at 95 Hataitai Road, in Hataitai, could be snapped up for less than $1m. Photo / Supplied
4 Pakura Place, in Wainuiomata, Lower Hutt, is on the market for $890,000-plus. Photo / Supplied
“In Upper Hutt you can buy really good quality existing homes on full sections for $700,000 through to $900,000, so there are some areas where you can still definitely purchase them,” he said.
However, anything close to the city has definitely risen in value, but areas like Johnsonville, Khandallah or Ngaio to the north of the central city are easy to access by train, which helps people with ongoing expenses of car parking and the cost of petrol.
Henderson would direct first home buyers to new builds as they can get a first home grant and use their KiwiSaver and buy on a 5% deposit - although he ddid not recommend buying with less than a 10% deposit. “Where would I be buying? Anything I could buy that was new that served my needs close to transport and infrastructure, so Tawa, Petone, Wainuiomata,” he said.
An example of this would be the four-bedroom, two bathroom home in Wainuiomata that Bayleys has on the market for $890,000-plus.
Henderson also highlighted the opportunities in Wellington’s inner-city apartment market.
“If you're living in town and you’re saving you can use any of the scooter brands to get around your exposure to costs. I think apartment dwelling, if you get the right body corporate structure, is probably the way to be for youngsters,” he said.
Aside from being able to walk to bars, cafes and restaurants people can do away with a gym membership by walking or jogging along the waterfront, but if they do want a gym then there are plenty of options available.
- Find more properties for sale in Wellington here.
