A perfect storm of factors is softening Wellington house prices and making its easier for first-time buyers just when they’re retreating from the market.

Everything, from COVID to inflation to lending policies, is impacting the market, Tommy’s Real Estate Sales Director Nicki Cruickshank says. “The level of COVID in Wellington has made the city feel like a lockdown over the past couple of have weeks and numbers been well down at open homes, but we expect this to improve in the coming weeks.

The strict borrowing rules, and the sheer difficulty of getting answers or appointments with banks, is one of the biggest complaints we hear from their customers. However, we do understand that banks are starting to relax their strict terms, which will certainly help. Inflation is also on people’s minds – the impact of petrol prices, for example, always tends to drive people to look closer to the city.”

She says these factors are making it easier for first-home buyers to purchase but, ironically, after years of frustration and despair over missing out because of competition and skyrocketing prices, some of these buyers are no longer active. “There is more choice, and with the banks relaxing slightly and a softening in prices, it is definitely easier for first-home buyers. But it feels to us as if a lot have ‘given up’ as it did get too hard. Hopefully, some of those ex-buyers will come back into the market and take up the opportunity of some choice around at the moment. However, I think we will lose some as they may take the opportunity to head overseas in search of more lucrative work opportunities.”

Because of an upsurge in listings, Wellington is “teetering on heading towards a buyers’ market,” Nicki says. “Like any market it is all down to supply and demand, and supply in Wellington is now in excess of 900 listings compared to this time last year at around 350. In saying that, that was extremely low and volumes are definitely up in sales this January and February compared to last year.”

Last month the Real Estate Institute of NZ reported median house prices in Wellington rose to $911,000 in January 2022 — up 14.6 per cent of the previous January. Sales jumped 9.0 per cent year-on-year and days to sell increased by 11, to 49 days, with fewer offers for properties and declining open home attendances. “There are definitely more sales,” Nicki says. “We were so short of properties to sell and have been for the past two-to-three years. However, as more properties come to the market and take longer to sell, we’re seeing the market flatten out. Most vendors are aware the peak has passed.

“In saying that, houses are still selling for levels above what they were a year ago. I suggest they are selling for what they are worth as opposed to, at the peak, selling for  more than 10 per cent above what they should have – with that ‘fear of missing out’ gone from the market.” Nicki says good homes in Wellington always sell well no matter what the market, “and this is generally four-bedroom family homes. There is never enough of them.”

She says the same is true of single-level homes while there’s strong demand for dwellings that suit buyers who are downsizing “Apartments seem to be selling well at the moment as well. But any homes with issues will become harder to sell now that the banks are having more say around the contents of building reports and any issues raised in council LIM reports.”

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