10 February, 2017
Wellington first home buyers market strongest in NZ
Wellington first home buyers (FHBs) continue to be a strong presence in a hot market shunning often cheaper apartments in favour of traditional three bedroom houses.
CoreLogic* data prepared for Westpac show FHBs made up almost 29% of the Wellington market in 2016, up 1% on the previous year and 5% up from 2010. This made Wellington the strongest market in the country last year for first home buyers. The data is based on a minimum of 60 homes being sold to FHBs in a suburb.
Six suburbs emerged as ‘hotspots’ with FHBs still showing they haven’t given up on the dream of at least three bedrooms and some land. There was a clear shift into new outer suburbs such as Trentham, Whitby and Titahi Bay as inner city suburbs like Newtown and Kilbirnie became more expensive. Traditional FHB areas such as Stokes Valley, Wainuiomata and Tawa remain the most popular.
CoreLogic Senior Researcher, Nick Goodall, noted that across the six top suburbs, sales to FHBs had made up over a third of sales in each suburb and were split between being Hutt Valley based or north of Ngauranga Gorge.
“First home buyers show a willingness to buy further out from the central city unfazed by the commute. By comparison inner city suburbs such as Kilbirnie (only 6 FHB sales) and Newtown (just 44 FHBs sales) have risen in price and are less popular. Similarly, out toward the Hutt, previous FHB suburbs like Petone have also risen in value (only 22 FHB sales with at an average of $536,000).”
“First home buyers also tend to buy the lower value stock within each suburb, with the average price paid by FHBs throughout 2016 below the median value of all properties in those suburbs”
Investors had come back into the market during 2016 and are often looking for similar properties as FHBs, Westpac NZ Head of Consumer Banking Central Region, Cat Feaunati said.
“But FHB’s have been undeterred by the re-entry of investors and are likely wanting to make the most of historic low interest rates, even if they have risen slightly more recently. The earthquake last year and the subsequent freeze on new insurance have also not deterred FHBs or the rest of the market.”
“Anecdotally, we’re also hearing about confidence in transport infrastructure and the future benefits of the Kapiti Expressway and Transmission Gully. Younger couples working in Wellington City perceive Horowhenua and Wairarapa as viable commuter options.”
Neighbour suburbs, Johnsonville and Tawa ranked sixth and fifth respectively for FHB, with Newlands number one – accounting for 45% of all house sales in the area. The average Newlands FHB sale price was $454,000, and mostly three bedroom 1960s/70s standalone houses went from $300 - $600,000.
FHBs in Johnsonville paid between $220 - $750,000, with an average of $491,000. In Tawa, for the second year in a row, more than one third of sales were to FHBs. Sale prices ranged from $240 - $750,000 with three or more bedrooms the most popular.
Slightly further afield in Porirua, Titahi Bay had the largest overall increase in popularity, with sales to FHBs going up by nearly 10%. While most sales were for three bedroom houses, sales for two bedroom houses were also common.
Overall, lower price points in Wainuiomata proved attractive making it the most popular suburb for FHBs, with 134 sales making up 41 percent of total sales in the area for 2016. Three to four bedroom houses in the suburb proved to be more affordable compared to some other areas, ranging $150 - $500,000. The average sale price was $275,000.
Another Hutt Valley suburb, Stokes Valley, wasn’t far behind with 99 sales to FHBs in 2016. Again, most sales were for three bedroom standalone houses, but sale prices were right across the spectrum, and started $190,000 going right up to $700,000.