Wellington Cycle Ending?

The market cycle in Auckland ended about 2 years ago, but that just seemed to kick off the rest of the country. The Wellington market is finally running out of steam and I suspect the rest of the country is into the last stages of the market before prices stabilise and rentals try to catch up.

How do I know?

Wellington Sales listings are now on the rise after 3 years of a shortage of listings:


Demand for rentals is now seriously tight:

Rents are not all growing at the same rates, some regions are short of rentals and in some there is developing a glut. A simple comparison of growth rates in rentals across the main regions shows a dramatic increase for Wellington while the growth rates have slumped in Auckland and Otago. There are reasons for this - that do not included greedy landlords.

Rents rally for multiple reasons, not only can a shortage drive up rents, but Household income is the main driver of rents. As can be seen below, Wellington is in catchup mode, not only with a shortage of rentals but also from a low of 18% of incomes to the typical historic upper level of 20% of incomes, with a bit of overshoot. I personally expect rents to come back a bit in Wellington as apartment blocks open shortly.

Contrast Auckland which was high during a shortage in 2012-2015, but now has more rentals available driving the rent as a proportion of income from 25% down to 22%.

Please comment below, I have avoided too muchcommenton this analysis and would appreciate feedback.



Jonette 2011