Following the first lockdown, however, we did predict that we would see a “V” shape recovery – a sharp upwards trend in house sales following the sharp decline brought on by the lockdown. And this is exactly what we saw happen. Coming out of the first lockdown in May 2020, instead of moving into a traditional ‘winter market’, we quickly perceived that the market was about to explode from what had been a relatively slow growth market for a number of years.
A market already short of sales stock was suddenly impacted by an influx of buyers, with many wanting to take advantage of historically low interest rates. The huge demand for housing, coupled with low supply of houses for sale, meant we had a very strong sellers’ market.
By mid-2021, it was clear that we were in a “property bubble”. Optimism was rising and there was a very high level of confidence. However, we knew that this bubble could not last forever; in fact the level of growth and the rise in median house sale price was not sustainable long term, and it definitely wasn’t a sign of a “healthy” property market.
As 2021 came to a close, I predicted that there would be a “market correction” in the next 12 – 18 months. This correction would see a correction of a small 10% decline to house prices – a very small drop when you consider the percentage of growth we have seen in the past year alone.
I identified three main reasons for this correction: less national buyers moving to Christchurch for its affordability and paying top end prices; developers acquiring land and building new homes; and interest rates increasing and new finance restrictions coming into play making it harder to get home loans.
So the question now as we head into Autumn 2022 is, has the market already been impacted by these changes – or are the “big” changes still to come?
In our latest Market Update Report, I discuss how the market today is still very busy – maybe not quite as busy as November/December last year, but still busy nonetheless. Interestingly, first home buyers are very active, with many of these buyers still having pre-approvals in place.
North Island buyers are continuing to see the benefit of making Christchurch home, keeping the upper end of the market strong too. This highlights that Christchurch is still one of the most affordable cities in New Zealand, especially when you consider what you can buy for your money in the greater Christchurch suburbs, such as West Melton and Rolleston.
However, we do still foresee that market correction of up to 10% coming into play as we head into the middle of the year. We expect that we will return to a ‘normal’ winter market this year – something we haven’t seen for the past two years since the start of the pandemic.
We never said the market will collapse, and I still believe that to be the case. There won’t be a huge, sharp drop, but there will be a return to a more healthy – and more sustainable - growth rate.
There will be more houses on the market, and consequently an increased confidence in vendors that if they sell their house, they will be able to find something to purchase, not left homeless!
Moving in Autumn, our recommendation is that while it is still a busy market, it continues to be a great time to sell!
For the full report, please take a moment to watch the video below. If you have any questions about the market, or would like to chat about your real estate options, please do not hesitate to contact us. We would love to hear your thoughts too!