‘I don’t see us dropping majorly’: Can Christchurch escape the doom and gloom?

Christchurch agents are expecting a more normal year ahead, despite talk of further interest rate rises and a possible recession.

Rachel Dovey, general manager of sales for Bayleys in the region, says the market has been slow to start but is back to more like it was pre-Covid.

She is not overly worried about doom and gloom forecasts: “There seems to be quite a lot of business coming on board and there's been quite a bit of a little flurry of activity. It definitely is back to that sort of typical January start. “

Dovey expects more properties will come to market in the coming months and feels optimistic, saying values in Christchurch have not dropped anything like as much as other parts of the country, such as Auckland and Wellington.

“We’ve only gone down about 5% and I think that’s going to be fairly consistent. I don’t see us dropping majorly.”

The latest REINZ figures show Canterbury’s median sale price last month was down just 3.7% year-on-year to $655,000. In Auckland, the median sale price was down 18% over the same period, while in Wellington the drop was 20%.

Canterbury’s backbone is agricultural and there has been a lot of development, new housing and the stadium project, which gives a lot of buffer in terms of economic confidence, she says.

It is an election year and election years can be “odd” but Dovey is not expecting the Canterbury market to be overly impacted.

Higher interest rates could be a challenge but that’s mainly because they are on the back of extremely low rates, but Dovey points out it was only about 15 years ago that rates were up around 8%.

Inflation pressures are real and put pressure on housing and affordability but she says there is reasonable activity at the lower end of the market with first-home buyers out looking and factoring in higher rates.

A four-bedroom home at 93 Whincops Road, in Halswell, Christchurch, goes to auction next month with high hopes. Photo / Supplied

Dovey also points out while there may have been a 5% drop in house prices in the city at the end of last year, prices over the past five years are up 48%.

“A lot of the conversations we're having with people is, ‘oh, is the market dropping?’ Okay, it might have gone down about 5% but we've over five years gone up 48% - we've got to get things in context here.”

Deb Hakaraia, director of Smart Real Estate, says open homes have started well and buyers are optimistic.

The main challenge is getting vendors to accept that the value of their property has dropped from the heady Covid years.

Prices in Christchurch have pulled back, although not as much as other parts of the country.

“I feel confident for Christchurch that we're not going to fall back too much but there has been a bit of a dip.

“Vendors' expectations are still high and buyers' expectations of what they can borrow are not matching up.”

Agents will have to educate vendors on the true value of their property in today’s market, she says, which might not be easy in some cases as some vendors have a figure in their mind based on the past few years but which is no longer achievable.

Hakaraia has just listed 93 Whincops Road, in Halswell, a highly specc’d four-bedroom, three-bathroom home with two living areas, with a price indication in the $900,000s.

Tony Jenkins, CEO of Harcourts Holmwood, says his gut feeling is people are positive and he says Christchurch is still in pretty good shape.

Sales are down, from 582 in Christchurch City in December compared to 779 for the same period the year before, according to REINZ figures, and that’s a significant change of volume which Jenkins puts down to higher interest rates and the economic outlook.

“We've got to face facts, volume is down and if someone wants to sell property they've got to meet today's market conditions.

“Buyers are price-conscious, they're aware of what's happening in the market.”

But people always need to buy and sell and that will continue: “I think there'll be some challenges but I don't think it's all doom and gloom.”

Nick Cowdy, principal agent with Cowdy real estate, thinks it may be harder to sell properties this year and expects there will be desperation to get listings among some less-experienced agents.

Some might give too high appraisals which will make it difficult for owners to see the wood for the trees, he says.