Blog

Movement between Hutt and Wellington?

Interesting trends are showing strongly between rental listings in the two cities of the Hutt (Lower & Upper) and the Central City of Wellington. Is this due to transfers of demand from the Hutt to Wellington? We thought so, selling our property in Petone in May on a rising valuation, while rental prices were falling, making a double whammy on yield.

This suggests that tenants are finding the City more attractive, while owners are finding prices in the Hutt more attractive - is that the case? More research is needed.

Listing Shortage Looming in Wellington

Total vacant home listings are at the lowest level since March 2010, and the trend is strongly down. Is this the beginning of a shortage in properties available for households due to inadequate construction levels? Rental listings are now at 2.5% of rented properties, compared with Auckland's 2.3%. Seasonal changes are hard to spot as the numbers of rentals are dropping at such a fast rate. Selling listings are covered by the media separately, but the comparison is interesting, with both rental and selling listings falling at extreme rates, the demand from new household formation will quickly use up supply, pushing prices up in both rentals and sales.

Infometrics Prediction may be Very High

Infometrics have predicted that Hawkes Bay house prices are going to be under pressure - “Between June 2011 and June 2014, house prices in Hawke’s Bay are predicted to rise 20% (or 12% in real terms), the biggest forecast increase in the country.”

While not rejecting the assumptions behind this prediction, my expectation is that supply and demand are more likely than economic conditions to be the initial driver of prices. The first year of Infometrics prediction is an expectation of 9.3% growth - difficult to see that with listings growing so strongly.

The chart above shows that rental listings - ie vacant properties, are rising up to the highest ever, reaching 420 listings compared to 263 for the same time last year.

Jonette 2011