Wellington Market Update October 2022

The housing market has suffered one of its worst winters on record, with Wellington being the hardest hit, but buyer interest is rebounding.

“We are starting to see higher stock levels in housing, despite people being nervous about putting their house on the market and worrying about all the bad news,” Tommy’s Real Estate Sales Director Nicki Cruickshank says.

“Ironically there are more people coming into the market every week to buy and we are starting to have multiple offers again on houses – something we haven’t seen in nearly a year.”

She says compared to the last four-to-six months, “there’s really good buyer activity in the market.

“It’s great to see so many first-home buyers back in the market. I think this is the biggest change from a year ago.

“First-home buyers got down to as low as about six per cent of our market, but I would suggest this is easily back over 20 per cent at the moment and feels like its still climbing.”

Nicki says Wellington has suffered the steepest price falls because it recorded the country’s biggest rises.

“So it had to be expected. If we are not already at the bottom, I feel like we are very close.

“Trying to chase the absolute bottom, and picking when you think prices will be at their lowest, can backfire.

“We saw how quickly the market went up last year and how quickly it’s gone down this year. It could turn again if supply doesn’t improve and prices could go up.

“That’s why you should buy at the moment: the market has simply had a sharp rise and a sharp fall but will recover, as per every other cycle over the years.”

While rising interest rates are weighing heavily on buyers’ minds, the price falls have helped to offset this.

“In most cases prices have come back around the 20 per cent mark, so buyers are borrowing a lot less, and therefore the difference in total payments is not a lot different,” Nicki says.

“On average, with a $200,000 deposit on a $1 million house, the difference between now and this time last year is about $69 per week in repayments.

“That’s good news if your house purchase is a long-term thing. When interest rates start coming down, you will be better off having purchased at a lower price.

“So it’s a great time to buy, especially if you don’t have a house to sell because that puts you in a powerful position above other buyers.”

She points out buyers also are under less pressure to purchase.

“A year ago a buyer would have to buy what they could — such was the ‘fear of missing out’ that decisions had to be made very quickly.

“Now buyers have a lot more choice and can take their time to secure a house they actually want.

“And mostly they have not had to be in competition with other buyers – so their choice has been great.”

Nicki says it’s investors who are being hit hardest by higher interest rates.

“This is their biggest cost and they can’t claim it as a legitimate expense — which will have a long-term effect on the number of rental properties in the city going forward.

“Homeowners who need bridging finance to upgrade to another property also are being impacted.

“But if they give themselves a good long settlement period, they should be able to sell their own home in that time and not have to use bridging finance.”