When I started writing Ben’s Barometer back in 2011, I raised the point that home owners should take care of any maintenance prior to sale. It is possible I have become a bit of a broken record on this point but unfortunately nothing has changed. Deferred maintenance continues to hinder the sale of otherwise fantastic properties. This ultimately has an effect on the end sale price.
Over the last few years the Wellington market has been fairly flat. Land values have remained steady but houses have been experiencing deprecation. Depreciation in simple terms is ‘wear and tear’ of your asset. When you consider work that needs to be completed on your house, it generally falls into two categories. These are: repairs & maintenance and capital improvement. This is even acknowledged by the IRD who allow landlords to make claims for ‘repairs and maintenance’ on rental properties. Work that falls in this category includes things such as installation of a new roof or a wiring upgrade. So that is work necessary for the ongoing upkeep of a property that is unlikely to provide a return on investment.
When the market is rising, buyers are less concerned with maintenance as it is likely that an increase in capital at the time of sale will offset any expense. When the market is not experiencing capital gains across the board, buyers view maintenance work and negative capital expenditure as a reason to offer less (taking into account the cost of works to be completed). Buyers are essentially breaking property value into two different components: the value of the land and their improvements.
My advice for those who haven’t done so to date would be to develop a long term maintenance plan for your property.
The Wellington Property Market
The number of listings on the market is down on this time last year and we have seen the days on the market increase from just twenty five to fifty five days over the last two month period. Sale methods have also started to change with more listings now converting to the ‘Price By Negotiation’ method. These changes are a direct reflection of the fact buyers are less willing to enter competitive situations such as Tender or Auction and would prefer to negotiate one to one with the owner. Low interest rates will be playing their part in continued market interest.
Average House Sale Prices for Wellington
|Jan 2015||Jan 2014|
- The West Indies won the first cricket world cup back in 1975 and defended the title in 1979.
- Australia has won the world cup title more than any other nation having a total of 4 victories.
- England has been runner up three times, the most of any nation.