The Whanganui residential property market continues it’s late cycle run, echoing the characteristics of regional NZ. First home buyers are the main culprits, stealing away valuable rentable housing stock. This has had the inevitable effect of pushing rents high at a fast rate of knots.
At the time of writing, there are a total of 205 properties for sale on TradeMe and only 45 available to rent. There are still stories of multiple applications for rental properties due to the shortage we’re experiencing in the wider Manawatu area.
Rents have skyrocketed over the last 18 months and can vary wildly between property managers by up to 15%. While most headlines point to a shortage of housing, in Whanganui, long-suffering owners might say that there is also a shortage of tenants who will look after their property, so it’s important in this market to have a good property manager on board.
Local property managers advise 95% of their clients have made the necessary upgrades to insulation and heating requirements in time for the 1st July, probably again due to repeat reminders. In my experience, looking through properties in the last 6 months, many private landlords haven’t made the necessary upgrades and we may see some of these investors choose to sell up rather than stump up the necessary cash.
The latest REINZ data show the market is still buoyant, with many multi offers. The feedback from local agents, is there are still first home buyers in the market snapping up renovated property. Local and Australian investors are active and often cash unconditional when high yielding properties or potential infill properties hit the market.
There were a total of 76 residential sales in April. 75% of the sales were in a range between $200,000 and $399,000 reinforcing Whanganui’s status as an affordable place to buy residential property. Average days on the market is 28, up 1 from March. This is a significant figure given the average is 48 days since 1992 and the lowest on record is 22.
Average sale price is up 11.8% year on year. Median sales price is $270,000, up from $262,000 in March. Its interesting to note on median sales price that the historic medians were $204,000 (32% increase) in 2018 and $144,000 (87% increase) in 2016. If you’re familiar with the Whanganui market you’ll know that the market has been pretty stagnant over the last 15 years and woke up about 18 months ago.
I can speak from experience as one of my own rentals based in Aramoho, a 3 bedroom rented for $200 per week when first purchased 14 years ago. Before a recent renovation it had increased to only $230 per week! Post renovation, this property is now appraised at $390 per week.
1-bedroom $215 - $250
2-bedroom $270 - $320
3-bedroom $320 - $400+
We’re currently top of the cycle at the moment in the area and while we’re still experiencing great turnover, I’d expect things to slow down by the end of the year, while some agents expect to see another 18 months of strong activity. Whanganui is a great area to hunt for bargains in a down cycle. This area is renowned for yield and while 8% is very possible currently, they are few and far between and require an experienced eye to create yield based on knowledge of the local market.