Six months ago, New Zealand was in complete lockdown and property sales were pretty much at a standstill. We predicted then that the property market would make a sharp, strong return, and now as we approach October, there is no doubt that the whole country is in the midst of a very strong sellers’ market.
The resurgence of confidence in the property market remains high as we move into the final quarter of 2020, with many first home buyers and investors looking to make the most of ideal buying conditions and low interest rates. In fact, activity and interest surrounding the entry-level market is the busiest I have ever seen, with properties regularly selling before they even make it to the public market. With high activity pushing property sales in the first home market, this inevitably has a positive flow-on effect to the rest of the market, encouraging sales at all budget levels.
However, as we discussed in our blog post last month, the high demand for houses is not being equally matched with the number of homes for sale. Unsurprisingly, a shortage of listings means competition increases, homes sell quicker, and sales prices reach an optimum.
Like elsewhere in the country, this is evident throughout Christchurch. Looking a little closer at suburb specific numbers, the majority of suburbs have reported an increase in median sale price over the past 12 months. The following figures are a selection of those released by CoreLogic recently, and for the most part clearly illustrate this growth pattern. You will note that the suburbs often popular with first home buyers show some of the largest growth in median sales prices.
Hoon Hay 6.4%
Aranui 5.8%
Wigram 4.7%
Somerfield 3.6%
Opawa 3.3%
Westmorland 2.9%
Cashmere 1.6%
Ilam -0.5%
Scarborough -2.1%
Fendalton -2.6%
Median sales price percentage increase, September 2019 – September 2020, CoreLogic.
In a ‘normal’ year, spring organically produces a flood of properties coming to the market as the weather warms and gardens bloom. I predict that 2020 will follow a similar pattern, albeit a little slower, and we will see the market balance out as summer rolls in. I believe that by the time we settle into 2021, we will see a property market sitting in a similar position to pre-covid conditions.
A healthy market is one where housing remains affordable. When median house sale prices have an average annual growth of approximately 2 – 4%, it means they correlate to the annual inflation rate and minimum wage increases. It is in areas with large percentages of growth that you start to see affordability issues for the average income earner.
With this in mind, the Christchurch property market continues to be in a very healthy place. Over the past 5 years, there has been an average increase in median house sale price of 2.8%. Compare this with Auckland and Queenstown, who have had increases of 6.1% and 10.3% respectfully.
The small, steady growth in Christchurch – and the greater Canterbury areas – has meant that the real estate market remains sustainable, keeping housing more affordable.
Whether you are thinking of buying or selling, we would love to help you navigate the current market, and work alongside you to help you realise your property dreams.