More than half of the Mt Victoria community are renting their home.  Anji Foster from Lowe&Co looks at the recent rental prices and renting compares to buying.

With 1245 rentals in Mount Victoria, there’s a good chance that if you are reading The Local you are currently a tenant. It almost seems like a rite of passage to have rented in Mt Vic.

Many of the people who look to buy in the area after living in the ‘burbs while kids are at school talk about their experience of renting in the area in their younger, child free days. Returning to Mt Vic is like returning to an era of thinking about oneself a little more, and enjoying all of the restaurants, bars, shops and waterfront on offer in our wider neighbourhood.

The median asking rent in Mount Victoria is $590. So, if you are currently paying rent but have plans to purchase in 2025, what are the options? At current interest rates, $590 pw is the equivalent to paying for approximately $450,000 mortgage. If you have a 20% deposit, that means you are looking at a property around $560,000. On the face of it, that would mean purchasing in Mt Vic might look challenging.

After working with countless first home buyers over the past 16+ years, I am often surprised at the lack of interest in looking at home and income options. In an area like ours, there are many properties that over the years have been converted to two flat or home and income properties. The additional income from rent can make a tremendous difference to how much you might be able to borrow.

So, whether Mt Vic is your ideal suburb to buy in or not, I would recommend speaking to a mortgage broker about what your budget might be if looking at a property that includes a separate income. It might be a pleasant surprise and may also open the door to opportunities closer to home than you imagined.

In terms of house prices, the local market remained fairly flat in the past twelve months with just a 1.5% increase in median sale price which currently sits at $1,116,000. As a comparison, the median sale price in 2021 was $1,300,000.

New rateable values are due out this month and might even be in hand at time of reading this. It is likely that the average RV has decreased by 20-25%. Some home owners welcome this, thinking it will also reduce their rates.  However your percentage of the overall Wellington pie remains the same, and therefore so will your rates.

How sale prices compare to the new RV’s could take a few months for the market to work out. The past two years has clearly shown the market value is considerably below rateable value. In Mt Vic in the past year, the median sale price has been approximately 26% below median RV. This would indicate the market value and new RVs could be fairly closely aligned.

The market will no doubt take a few months to re calibrate, as buyers and sellers get comfortable with the new RV environment. Buyers have been accustomed to the RV been significantly below market value and will need to get comfortable with offering closer to RV, and after we experience some capital growth over the next few years then we are likely to return to a climate of surpassing RV for many sales.

Whatever your property plans are over the coming year there will be plenty to keep you updated on, but if you have any specific property questions that you would like to discuss, please don’t hesitate to reach out.

Source:  REINZ Suburb Report