This stability is due to a diversified economy with less reliance on the primary sector, moderate exposure to
tourism fluctuations, the stabilising effect of the public sector, and strong commercial ties to Auckland’s economy and job market. In the past year, job numbers in Wellington increased by 4.7%, surpassing the national growth of 4%. Since 2014, employment in the region grew slightly below the national average at 24.8% compared to the nationwide growth of 27.5%, but this difference isn’t significant enough to suggest ongoing underperformance.
The relationship between jobs growth and housing price growth implies that Wellington's housing price increases shouldn’t significantly diverge from the national average. The region has generally maintained a lower unemployment rate, with the latest rate at 2.8%, below the national rate of 3.5%. This suggests that the pandemic might have temporarily favoured the job market in the capital city compared to the country as a whole. However, this situation might not persist once the overall New Zealand economy starts accelerating again, likely in the latter half of 2024.
Despite these positive factors, data already shows a worsening shortage of available properties for purchase in Wellington. There is a potential risk that housing prices might have decreased more than necessary since the correction that began in late 2021. Interest rate changes by RBNZ have of course affected Wellington property finance rates and demand.
Source data by Tony Alexander and First Mortgage Trust.
Fifo Capital is a lender for Wellington property finance. Click the link for details.