Wellington property values drop further than official figures suggest
Wellington property owners may be facing sharper declines in property values than recent figures from QV (Quotable Value) suggested.
According to the latest QV data, the average house value in Wellington has dropped nearly 25% over the past three years, dipping below the $1.1 million mark. Similarly, average land values have seen a dramatic decrease of 36.7%, now standing at $621,000.
Early reductions and market trends
David Nagle (pictured right), QV’s chief operating officer, explained that the majority of this downturn took place at the start of this three-year period, particularly in 2022, which was a tough year for Wellington’s real estate market, RNZ reported.
“Wellington is following the trend of the rest of New Zealand but got hit a bit harder due to public sector cutbacks impacting job security and consequently the property market,” Nagle said in a discussion on Morning Report.
The impact of past buyer sentiment
Reflecting on the frenzy of the 2021/22 market, Nagle noted the prevalent fear of missing out (FOMO) among buyers.
“People that purchased a property three years ago would say, ‘I probably paid too much,’ and those that didn't would be probably thinking, ‘I made a good decision and I'm in a better position now to buy,’” he said.
Reevaluations and potential objections
Wellingtonians will soon receive updated property valuations by mail, with a deadline set at the end of March for any objections to these assessments.
However, Nagle cautioned that these valuations, determined in September of the previous year, might not accurately reflect current market values.
“We're probably seeing the market come back slightly further in that five-month period,” he said, suggesting that the actual market conditions could be worse than reported.
Economic factors and future outlook
Amid ongoing economic challenges and a housing market that remains unaffordable for many, the recovery looks uncertain.
“We’re probably at or very near the trough of the cycle, but there are still several headwinds, including tight credit conditions and a slow retreat in interest rates,” Nagle said.
Nagle also highlighted the potential impact of global trade conflicts and international tensions on the speed of recovery.
Implications for homeowners and rate changes
Homeowners shouldn’t necessarily expect a reduction in rates even if their property’s value has decreased.
“Just because your value comes down, that doesn't necessarily mean that equates to a rates reduction,” Nagle said.
The adjustment in rates will depend on the council’s overall budget and how an individual property’s value change compares to the average.
With the most significant value drops recorded in areas like Crofton Down, Ngaio, and Miramar, property owners across Wellington are bracing for the official reassessment and the financial implications it may carry into the future, RNZ reported.
