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Joke With A Stunning Punchline

Joke With A Stunning Punchline

Bland niceness has turned into sought-after city as Lower Hutt comes into its own, writes Sally Lindsay.

By: Sally Lindsay

1 March 2022

Lower Hutt is one of the best places to live in New Zealand. That’s according to recent data extracted from a Sweet Spots project.

Some people, however, still have the impression Lower Hutt is a joke because of its genteel pretensions and bland niceness.

That is being somewhat diffused by beautiful gardens, a stunning civic centre, the world-class Dowse Art Museum as well as the city housing the biggest collection of science, technology and high-value manufacturing businesses in the country.

Lower Hutt covers 377 kilometres around the lower half of the Hutt Valley and along the eastern shores of Wellington Harbour.

The city takes its name from the English name given to the river, named after one of the founding members, director and chairman of the New Zealand Company, Sir William Hutt. It is the sixth most populous city in New Zealand.

Before the Second World War, urban settlement in the lower Hutt Valley was concentrated mainly on Petone, central Lower Hutt and Eastbourne.

In the late 1940s new suburbs of state housing developed along the eastern side of the Hutt Valley, from Waiwhetu to Taita, to alleviate nationwide housing shortages and to cater for a booming population.

While that meant a divide between what many perceive as the poorer and richer areas of Lower Hutt, the city along with the rest of the country has not been immune to house prices shooting ahead over the past year.

House prices across 10 suburbs have risen from from 27% to 32%, although the occasional bargain can still be found in Naenae, Taita and storied Wainuiomata.

CoreLogic’s Lower Hutt data show the popular suburbs of Taita, Waiwhetu and Naenae rose 30.3%, 27.8% and 27.4% in the January year respectively.

At the top end of house price rises, Maungaraki rose 32% from $851,150 on January 1 last year to $1,128,000 on January 1 this year, followed by Moera increasing 31.7% from $601,900 to $792,950 and Normandale from $853,150 to $1,119,500.

House Price Boom Ending

The exponential rise in house prices over the past year is ending, says John Ross, managing director of Professionals Lower Hutt.

“The mini credit-crunch created by banks’ scrutiny of applicant’s spending under the Credit Contracts and Consumer Finance Act (CCCFA) is having an impact on house prices,” says Ross.
“Because buyers are having difficulty in getting mortgages prices are dropping. Some vendors have already had to reduce prices by up to $150,000."

Ross says over the past couple of years the agency has sold hundreds of off-the-plan new builds. Many are just four months from completion and buyers are going back to their banks to find funds are no longer available for settlement and they are scrambling to find other sources of mortgage lending.

“Banks are also asking for a further property valuation when they have not required them in the past. Developers may give an indication of completion date, but it is taking weeks to get 223 and 224 certificates and up to six weeks to get a title from LINZ (Land Information New Zealand). It just adds unnecessary anxiety and extra expense for buyers and developers.
“We are expecting we will not sell as many off-the-plan new builds this year because of the artificial financial environment that has been created by government policy. The result is buyers can’t pay what developers want.”

Ross says the Government doesn’t seem to know how to make policy without unintended consequences and CCCFA changes have shown that. The changes are having the biggest effect on people who need the most help.

“For example, people who have saved $120,000 hoping to buy a stand-alone house on 500m2 have been told overnight they are not able to buy with a 10% deposit. With their savings they are now forced to look at a new $800,000 apartment with their 10% deposit.
“Meanwhile, elderly people who do have a stand-alone house on 500m2 and want to sell to buy an apartment have lost a buyer and they can’t move. This is the market right now.
“The government needs a policy that frees up houses no longer fit-for-purpose for older people, who can then sell them to younger buyers, which allows them to get into their first home.” Instead, the government is creating a two tier market, says Ross.
“People who have money can buy investment properties and they are not choosing terraced houses on 120m2 sites, they are choosing stand-alone houses on 500m2 plots knowing they won’t get mortgage interest tax deductibility, but instead relying on a better return from an older property and further down the track perhaps selling to a developer.”

About 2,000 new houses are in the pipeline for Lower Hutt. Two thirds are terraced houses and one third standalone housing, many being built in the western hills and Wainuiomata areas ranging in price from $950,000 to $1.5 million.

Ross says the freestanding houses are good value compared to terraced housing and are mainly on a 350m2 site with a single or double garage and off-street parking, whereas a terraced house is on a 120m2 plot with a 100m2 house. Hutt City Council has quickly adopted the National Policy Statement discouraging developers from providing much, if any, off-street parking.

“Now the market has turned, buyers are not as keen on properties without off-street parking,” says Ross. “We are yet to see what difference it will make to the rental market.”

Advertised properties for sale are increasing with 496 on the market a couple of weeks ago, plus new builds not advertised as one property. At the height of the property boom last year there were just 120 houses advertised.

Renters Look Further Out

The few advertised properties for rent in Lower Hutt have multiple applications on them and that’s not unusual, says Lynley Horne, Oxygen property management regional manager.

“It has been like this for a while. Of the limited properties up to 20 people get to view about two-thirds of them will make an application to rent it,” says Horne.
“More people can afford to rent in Lower Hutt and while it may be out of the way for many Wellingtonians, it is still close to the city’s central suburbs.”
She says while renters may prefer the city, it mostly has clusters of apartments and few three to four-bedroom homes. “Because of potential social issues, size of apartment blocks and affordability, renters are looking further out and Lower Hutt’s attraction is being able to rent a two to three-bedroom house with off-street parking.”

The market is tight, though. Houses are renting within a fortnight as property managers can put more people into a stand-alone house than an apartment.

Horne says one frustrating trend has been so-called tyre-kickers – people registering to view a property and then not turning up. She suspects some are in emergency or transitional accommodation and are registering for viewings to show they are looking for a home so they don’t lose their place in government-subsidised housing.

Despite this, no one area of Lower Hutt is more popular than another for renters. Most of the rental housing is in Naenae, Petone, Waiwhetu, Taita and Wainuiomata and Horne says increasingly renters are taking school zones into account.

Average rents are increasing. For example, in Hutt Central a threebedroom home is $680-$700 a week and it increases to $780-$800 a week for an extra bedroom. A two-bedroom house rents from $500-$550 a week.

Lower Hutt investors are holding onto their rentals. Horne says about 15% of properties dropped off the company’s books at the end of last year – but putting that in context, it was only five rentals. “I am not sure those investors will come back into the market.”

The company is also adding new properties to its books as landlords turn to professional property managers as compliance and costs increase.

She says if the government introduces rent controls, they will hit landlords hard. “Rental property is a business and should be run like a business. It is not in landlords’ or renters’ interests to slap them with legislation making it difficult or almost impossible to operate.
“Most landlords have a good moral compass and we work on the 5% rule — 5% of unruly tenants and 5% of difficult landlords. In reality most landlords want to do the best they can for their tenants.”