Described by a growing number of experts as “flat”, the property market in Christchurch has undeniably moved into an advanced post-earthquake phase. According to sales and property valuation company Quotable Value (QV), sales volumes have fallen along with some home owners experiencing minimal (if any) growth on average house prices as well as properties generally taking much longer to sell.

While some areas of Christchurch are pretty stagnant, some are still increasing, just at a slower rate than has been experienced in the past. Experts are looking at the market as being more realistic and less speculative than other areas around the country. The up side is renters are finally experiencing some relief from the lack-of-supply driven highs seen across the 2011-2015 period.

 

What Is Causing The Christchurch Property Market To Slow?

While the Christchurch property market may be considered fairly flat at the moment, it is not entirely unexpected in the aftermath of a period of rapid growth essentially spurred on by an uncharacteristic event such as an earthquake. The drop in activity would seem to be an inevitable self-balancing of the market. However experts say it is a combination of several factors combined:

• Over Supply. The post-quake building frenzy has led to a lot of new properties being built in the Christchurch area, many of which are spec houses. Coupled with a government-led increase in the building of high density housing, it seems the building has continued to the point where supply outweighs demand.
• Lending Restrictions. The introduction of stricter lending restrictions by banks has made borrowing more difficult, particularly for first-time buyers and investors. Although the 40% investor Loan To Value Ratio (LVR) was introduced last year, the market is still adjusting to the new lending requirements.
• Interest Rates. After the interest rate lows experienced in 2016, interest rates have now risen somewhat. The higher rates mean people are unable to borrow as much as they would have, or are likely to be more conservative in their borrowing decisions. 
• Unrealistic Pricing. While sellers are still expecting previously seen higher pricing levels, with more properties to choose from there has been an increase in buyer resistance to purchase property at unrealistic prices.
• 2017 General Election. Its election year and with that comes uncertainty not only in the property market but for business and the general public. Competition for votes can mean political parties seek to promote policy and discussion around topics of current concern – of which the property market is a big one. The current contribution to market weakness due to election uncertainty is likely to continue till after the election result is known.

 

What Does This Mean For The Housing Market In Christchurch?

Following the 2010-2011 earthquakes the demand for housing in Christchurch saw rapid growth with many forced from their damaged homes seeking alternate accommodation. Rents reportedly rose by more than 40% in the years that followed and safe, sound property was at premium.

After this initial surge, which seemed to reach its peak sometime in 2014 – 2015, building activity has seemingly continued even though the demand has petered out. Meaning the city and its surrounds are currently facing the possibility of oversupply. 

High Density Housing

With many experts warning the Christchurch property market bubble was unsustainable, it appears their predictions have materialised particularly for certain types of properties. Large developments of spec housing and council-led high density living being the main casualties.

High density housing developments have been the first to feel the impact after seeing a rise in popularity pushed along by new local council zoning rules which saw developers required to have a mix of housing densities in their subdivisions.

While the row upon row of duplicate designs and reduced section sizes style of living make sense to developers who are more concerned with profits, these types of homes do not generally appeal to New Zealanders unless location is a determining factor or where price places them as a priority in the market. Generally speaking high density living is attractive to buyers in central city for the location benefits it brings, but in the suburbs its more about affordability.

Inner city suburbs and central city locations place apartment and townhouse style living in the convenience bracket. However high density housing in the outskirts of Christchurch has met some resistance as comparable stand-alone properties are seeing more competitive pricing and a plentiful supply of these types of units is available nearer the central city.

As Is Where Is Quake Effected Property Sales

‘As Is Where Is’ property sales in Christchurch have been more likely to be snapped up in situations where a bargain is spotted, however sometimes these homes are uninsurable, or have repairs that have not been carried out. The drawback for these properties is they still carry the risk of the council or insurers requiring proof of repair in future.

Ultimately the oversupply of properties in Christchurch will contribute to falling demand which in turn leads to a drop in sales. Meaning there is an increase in properties for sale resulting in a strong buyer’s market.

 

Christchurch Suburbs Of Interest

QV figures show the extent of the market flatness with average property values for Christchurch City in June 2017 sitting at $496,378 compared to $491,148 at the same time in 2016, barely a noticeable change.

The Christchurch Hills suburbs bringing in the highest average values with valuations reaching $664,643 for June 2017 and $663,657, both with barely noticeable changes over the twelve month period.

The lowest average valuations were obviously found in the most quake effected Eastern suburbs with average values having dropped slightly from $372,878 in 2016 to $372,246 in 2017.

Christchurch Satellite Towns

 

Not technically suburbs of Christchurch as they fall within either the Waimakariri or Selwyn districts.

Rolleston

One of the larger Christchurch satellite towns, Rolleston has seen immense growth over the last 5 years with huge subdivisions and full scale commercial developments including a huge new Warehouse store under construction, the addition of a second major Supermarket and various additional smaller shops popping up around around the township. There is also a brand new community centre/library facility currently in the planning stages.

Rolleston central’s population has surged from just over 9000 people in 2013 to well over 13,000 in 2016. Latest predictions suggest Rolleston will easily hit 20,000 within the next ten to fifteen years. Rolleston has been among the fastest growing areas in the country, however it is not immune to the current market conditions.

Pegasus

To the north of Christchurch buyers will find Pegasus Town, another satellite town similar to Rolleston that has been designed with the future in mind. However Pegasus is much younger having only began construction in 2006.

The ambitious development was hit with earthquakes and its very own financial crisis - having stalled the promised development somewhat. However the population sits at around two and a half thousand people currently and continues to grow. Median sales prices have dipped over the past few months, consistent with other satellite towns as the market settles.

Kaiapoi

Serving as the entry point into the Waimakariri District, Kaiapoi is approximately 17 kilometres north of Christchurch. Kaiapoi’s east side population suffered a big hit in the aftermath of the earthquakes with many businesses and homes falling victim to severe damage. According to Statistics NZ there was a 59.3% decrease in the number of residents usually living in Kaiapoi East by the time the 2013 census rolled around.

Kaiapoi has recovered with many new subdivisions and building projects completed or underway, however as with other northern towns there is still a problem of traffic congestion on connecting roads to Christchurch particularly over the Waimakariri River.

 

Christchurch Outer Suburbs

Christchurch suburbs that lie outside of the central city boundaries.

Halswell

Situated to the southwest of Christchurch, Halswell has rapidly expanded since the earthquakes. New residential subdivisions have pushed its borders out towards the south engulfing what was once nearby farmland.

Topping the list for number of sales over the last few months, Halswell’s average house values have seen properties experiencing some of the city’s largest value increases at 2.4% over the last year. However high density living options have struggled.

Wigram

Wigram has recently undergone a large amount of construction due to the redevelopment of the Air Force land sitting at its centre. Labelled Wigram Skies, the Ngai Tahu development provides a whopping 4000 homes and has seen prices remain fairly stable with the average median sales price sitting on $566,000.

The release of the Wigram Skies land was one of Christchurch’s most significant residential developments to occur in recent years. It’s conveniently located close to existing amenities, and includes plans for a Primary School in 2018.

Addington

Just outside the central city, Addington faired pretty well in the earthquakes and has ended up becoming a popular commercial hub. Commercial construction has taken off with many businesses preferring it over central city locations for its accessibility, increased parking and lower rates of rental.  

There is limited residential activity in the area, with the majority of housing being smaller 2 or 3 bedroom properties or double storied housing with townhouse style designs, these properties sell well in the area where the location is the priority. Horncastle Arena and Addington raceway are located in Addington.

Prestons

Another new residential subdivision, Prestons is roughly 20 minutes to the north east of Christchurch. Nestled between Redwood and the Bottle Lake Forest Park with the beautiful east coast only a stone’s throw away, the Prestons development has been popular with city dwellers looking for a bit more green space.

Having suffered no liquefaction or lateral spreading during the Christchurch earthquakes the subdivision has been popular with east-sider relocations looking for quality new homes.

 

New Zealand Average Residential House Values June 2017

Looking to compare Christchurch house prices with the rest of New Zealand? Here are some of the average house values for residential property across New Zealand (Source QV Property Valuation)

• Christchurch City $496,378
• Christchurch Hill Suburbs $664,643
• Christchurch Central and North $586,427
• Christchurch Southwest $475,906
• Christchurch East $372,246
• Auckland City $1,228,005
• Auckland North Shore Coastal Areas $1,376,695
• Auckland City East Side  $1,534,921
• Queenstown-Lakes District $1,071,995
• Nelson City $532,120
• Wellington City Overall  $727,119
• Wellington West Area $842,417
• Tauranga City $683,012
• Thames Coromandel District $710,548

 

Christchurch Property Market Useful Links

• Economic Overview – Treasury information in New Zealand.
• NZ Government Information – New Zealand Government resource.
• Trademe – New Zealand’s most popular platform for the sale and purchase of property.
• Realestate.co.nz – Searchable database of New Zealand real estate for sale.
• Statistics NZ – Government statistic collection company.
• Quotable Value – New Zealand Property Valuation Company.
• Mortgage Calculator – Online mortgage calculator.

 

Even though it has been through tough times Christchurch has remained resilient, its current property market reflects its recent history and unique nature as one of New Zealand’s only major cities with an abundance of flat land surrounding the city that is not confined by the restrictions of water or land that is unable to be built upon. Good houses in desirable locations will always be saleable.