Wellington, the new Auckland! Not likely

You could be forgiven for thinking that the Wellington property market had become just like Auckland's. There are reports of dozens of groups through open homes, a shortage of listings, rapidly rising prices, Asian buyers buying sight-unseen, first home buyers armed with Kiwisaver funds, and scores of Aucklanders purchasing for investment.

So how does the data stack up to measure the strength of the Wellington market?

Firstly, we can measure buyer demand based on the number of valuations by the banks.

This has surged to record levels right across Wellington, especially since December.

There is nothing published about how many people attend open homes. However, I have heard scores of anecdotes all telling similar stories about properties attracting dozens or even hundreds of groups through open homes. That's a big change in the Wellington market.

The total number of properties for sale in Wellington is around half of what it was this time last year, and continues to fall as the number of properties selling outstrips those being listed for sale. This dramatic fall in choice combined with high demand puts the power in the hands of the seller.

Values in Wellington had increased by just under 10 per cent in the four years to September 2015. Since then they have increased 11.2 per cent, the fastest since 2003. More affordable properties up to $700,000 have increased 15 per cent since September, while those over $700,000 have only risen 7 per cent.

Of course there is no measure of Asian buyers, but one recent anecdote of an Asian buyer purchasing from afar turned out to be former Wellingtonians wanting to return home.

We do however have a way of quantifying how many Auckland investors are now buying in Wellington.

From 2005 to 2015 between 2 per cent and 3 per cent of all sales in Wellington were Auckland investors.

In the last six months that has risen to 4 per cent. Yes that's an increase, but hardly like Hamilton where they are 16 per cent to 18 per cent of all sales.

Our buyer classification analysis also shows investor activity has been climbing in Wellington since mid-2013 and they are now picking up 40 per cent of all sales.

First home buyers have been steady for the last nine months at 26 per cent. Meanwhile, first home buyer activity has definitely picked up in the Hutt Valley and Porirua.

There are definite similarities to the Auckland market with high demand coupled with short supply and investors being the most dominant purchasers.

Only time will tell if the current rapid rates of value increase will persist like they did in Auckland. I think not.