Nine Million dollar suburbs for Wellington

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Recent stuff article - Nov 5 2018

Wellington house values have rocketed up nearly 50 per cent over the past three years. 

New property valuations for the capital show nine suburbs now have an average residential property value of more than $1 million, with some of the sharpest hikes in value occurring in suburbs once considered affordable.

The latest release of council valuations, produced by QV every three years, shows residential house prices have jumped an average 44.6 per cent.

The average house value in the capital is now $877,000 while land value is $476,000 – a 77 per cent rise.

When council valuations were last calculated in 2015, the city's average house value increased 6.6 per cent over the three years previous, leaving just three suburbs – Seatoun, Oriental Bay-Roseneath and Kelburn – where the average value exceeded $1m. 

This time around, Broadmeadows-Khandallah, Northland, Hataitai, Thorndon, Te Aro and Mount Victoria have all joined the million-dollar club.

Suburbs broadly considered affordable – Tawa, Newlands, Paparangi and Woodridge – all saw a more than 50 per cent increase. Average house values in these suburbs now exceed $600,000.

But the biggest growth was again seen in the suburbs of Berhampore, Mt Cook and Newtown where average house values jumped 55.8 per cent, to $860,000.

Those same suburbs enjoyed the biggest value gains in 2015. But back then the increase was a more modest 10 per cent.

Business properties in Wellington's CBD also saw strong value growth of 23 per cent, although it was roughly half that of residential properties.

QV general manager David Nagel said prices in Wellington remained fairly flat up until 2015.

"All of a sudden the market sprang into life in Wellington, following what we've seen in Auckland."

But Wellington was no Auckland, he said, with affordable properties available in Newlands and Tawa, and viable locations open for housing development in the region.

Wellington house values may yet increase further, as interest rates remained low, migration numbers high and the business sector continued to have confidence in property, he said.

"Without an international event occurring that might change interest rates or property confidence, I think there might still be a bit more juice in the market."

Mayor Justin Lester said he wouldn't want to see the same steep increase in house values in three years' time.

"I'd like to see a consistent increase, but then with more affordable options for those seeking to enter the market."

He said council would look to convert 15 to 20 CBD buildings into affordable apartments in the coming decade, adding to a projected council social housing increase of 750 dwellings and the Government's KiwiBuild efforts. 

The new council valuations will be used to calculate an increase in rates, due in July 2019. 

Wellington City Council chief financial officer Andy Matthews said ratepayers should not expect to see major fluctuations in their rates bill due to the increase in value.

"This is not a surprise to us, and the council will work through the overall rates increase ... you'll see some small variations but we don't think that's going to be significant."

In Auckland, the city council was in dispute with QV over a short-cuts taken in valuation re-assessments and missed two deadlines earlier this year.

Nagel said the error was isolated to Auckland Council processes, and he assured ratepayers the same would not happen in Wellington.

In 2015, there were 1752 objections to ratings in Wellington.

INCREASE GOOD - IF YOU'RE SELLING

Kilbirnie resident Elizabeth Steer looks to be sitting on a winner after buying her home on Yule St for $288,000 in 2003.

Fifteen years later, Steer's three-bedroom home has an estimated value of $735,000 – a 155 per cent increase.

"It's quite a lot of money for what is a worker's cottage, essentially," Steer said.

The house was originally built in 1907 and was "quite narrow", with a floor area of 100 square metres and land area of 253sqm.

But for all its rise in value, Steer said that only mattered if you were looking to sell.

"I'm obviously happy if I was looking to move out of the market I'm in. But if I wanted to buy on the same street, that's impossible now."

On top of that, Steer's rates had about doubled over the past 15 years, and the amenities those rates paid for were "not that much different".

The area was not considered trendy when Steer bought the property, but she liked the all-day sun, and connection to bus routes and shops.

The area had become much more popular in recent years, she said.

 
 
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WILL THIS INCREASE MY RATES BILL?

Rates bills generally rise with house values, but the two aren't directly connected. 

As the overall value of properties in Wellington have increased, so has the pool of value council draws rates. Meaning ratepayers will pay less cents in the dollar, but pay this levy on a greater dollar-value.

Limiting Wellington City Council's ability to escalate rates with house value is contained by a $350m self-imposed limit in rates revenue until 2021, per the council's 10-year plan.

The council has also said it will raise rates at an average 3.5 per cent per year until 2021, and an average 4 per cent per year until 2028.

Rates will increase by 3.6 per cent in 2019-20, with sharper hikes to come. An increase of 5.8 per cent is anticipated for 2021-22, and 6.2 per cent for 2023-24.

The self-imposed rates revenue limit will raise to $495m in 2021, when a targeted tourism rate will be put in place. 

In 2017 the council drew rates from 78,192 properties, valued in total at $55.5 billion.

HOW RATES ARE CALCULATED

Rates for a standard residential home with sewerage, water and stormwater connections, were calculated in 2018-19 as 0.445828 cents in the dollar – not quite half a cent.

To calculate the rates for a property valued at $500,000 you would multiply this number by 0.445828 and divide by 1000, ending up with a rates bill of $2,229.14.

Add the annual water charge of $185.43 and sewerage charge of $133.81, and the total rates to pay is $2,548.38 this year.

This does not include Greater Wellington Regional Council rates, set at 0.090535 for 2018-19.

Read source here:

https://www.stuff.co.nz/business/property/108353295/nine-milliondollar-suburbs-for-wellington-as-house-values-jump-nearly-50-per-cent