Christchurch prices lure out-of-towners

More affordable house prices and out-oftown buyer interest are driving strong activity in the once-quiet Christchurch market. Miriam Bell reports.

Sky-high prices in Auckland and Wellington dominate the headlines, but new Trade Me Property figures show homes in Christchurch are being snapped up faster than ever before.

In October, the median length of time a Christchurch listing stayed on the site was down 22 per cent to 25 days, from 32 days at the same time last year.

It is significantly lower than in the pre-Covid times of October 2019 when Christchurch listings were online for an average of 35 days, and lower than last month’s nationwide median listing time of 30 days.

The figures also show Christchurch properties are the most watchlisted. Eight of October’s 10 most watchlisted properties nationwide were in the city, as were 60 per cent of the top 100 over the past six months.

Trade Me Property sales director Gavin Lloyd said the increased market activity comes down to its comparatively affordable prices, which allow buyers to get ‘‘better bang for their buck’’.

Last month, Trade Me put the city’s average asking price at a record $648,450. The Real Estate Institute had its median sale price at $685,000 and CoreLogic had its average value at $693,864.

All three organisations’ figures show Christchurch prices increased by more than 22 per cent over the past year.

But CoreLogic recorded the biggest jump: it had prices up 31.9 per cent, the city’s strongest growth on record.

Despite this, Christchurch prices remain more affordable than those in the other main centres. Trade Me said Auckland’s average asking price was $1.31 million and Wellington City’s at $1.02m last month.

Lloyd said the number of properties for sale in Christchurch city was down 27 per cent year-on-year last month, and this was putting pressure on the market, pushing prices up.

But with prices still relatively affordable and many businesses open to remote working, it is no surprise there is a flurry of market activity, he said.

‘‘Christchurch is a modern city with a lot to offer and a bright future ahead.’’

This has resulted in growing interest from potential buyers in Auckland and Wellington. Trade Me’s figures, showed a 46 per cent increase in Aucklanders searching for property in Christchurch last month and a 71 per cent increase in Wellingtonians, compared to the same time last year.

Further evidence of this trend is in Realestate.co.nz figures covering the period Auckland has been in lockdown (August 18 to November 16). They show 2.3 per cent more Auckland users looked for properties in Christchurch city than in the same period last year.

Realestate.co.nz chief executive Sarah Wood said this increase may sound small, but it equates to 178,000 Aucklanders looking to buy in Christchurch.

Many Christchurch agents have told the listings’ website team they are speaking to Aucklanders wanting to move away from the city because of the lockdowns and the figures confirm this, she says.

‘‘Record-high average asking prices will be one factor for this, but there are other considerations too. Many who were once pinned to the city for work are now able to work from home, and being in Auckland has meant living a life of restrictions since April, so it’s no wonder some are looking to leave.’’

There is no doubt the Christchurch market is performing exceptionally well right now, Ray White Christchurch Metro director Tony McPherson said.

He has been in the industry for 30 years and the current market is the strongest he has seen. It comes after a long, relatively flat period after the earthquakes, so there is an element of catch-up with other areas going on, he said.

‘‘But it is still more affordable than the other big cities. Properties here are just over half the price of those in Auckland. That’s very attractive to people wanting to get on the ladder, but priced out of Auckland.’’

There are other attractive factors at play, he said, including a high amount of new-builds, which allow for lower deposits and offer tax breaks for investors.

Another is the ongoing rebuild that is making the city an increasingly vibrant place to live and attracting people in their 20s and 30s back.

McPherson said his agency is getting lots of inquiries from buyers outside of Christchurch, and the high demand means the market is busy at a time many others are getting quieter.

While it is hard to tell what impact the arrival of Covid in the city and the reopening of the country’s borders will have, demand is likely to remain strong – although the market may be at its peak now, he said.

‘‘There are still opportunities for buyers as properties are a good value proposition, and momentum in prices means there is scope for gains.

‘‘Plus, the rebuild also means a high proportion of the housing stock is built to the latest codes and seismic requirements. All these factors are underpinning demand as the city evolves.’’

CoreLogic chief property economist Kelvin Davidson said it is easy to see why people from other cities are looking to Christchurch to buy.

While prices are less affordable than they have been, if someone is coming from Auckland, Wellington or Tauranga they are very attractive, he said.

‘‘Especially now remote work has taken off. Once, it might have been hard to find the range of jobs and salaries you can find somewhere like Auckland, but that has changed and there are more comparable options.’’

But, along with rising mortgage rates and tighter lending conditions, there is an extra headwind for the market. Davidson said the supply of new land for new housing seems to be drying up.

‘‘The greater land availability around greater Christchurch has kept price increases more moderate than elsewhere. Higher supply gave people choices and helped with the supply-demand equation.’’

Reduced land supply means the reason Christchurch is more affordable is changing, and it may be the city starts to see similar price issues to other places over the coming years, he said.

‘‘Prices won’t necessarily catch up to Auckland or Wellington, but as supply becomes more of an issue they will increase faster than elsewhere. That creates pressure and could impact on the market dynamic.’’