Canterbury is the country's hottest housing market right now, with the region's average property value rising 32.7% ($183,000) to $743,000 in the 12 months to November 15, well above the annual growth rates of Auckland and New Zealand.
The region's housing market has also come out of the most recent Covid lockdown like a rocket, recording 9.3% growth in the average property value over the last three months - the highest quarterly growth figure of all the regions.
A frenzy of buying activity in Christchurch (10.1% quarterly growth) and Selwyn (12.7% quarterly growth) has driven much of the lift but the majority of Canterbury TAs have recorded strong growth over the quarter. Only one, Ashburton, has fallen behind, with the town's average property value falling 1.9% (-$11,000) in the three months to November 15, although still up 22.6% on November 2020.
The surge has come at a cost, though with the 20% deposit on a typical Canterbury home now $148,000 - $36,600 more than a year ago.
Start your property search
However, rising prices have not deterred first home buyers, whose share of new mortgage registrations throughout the year has hovered around 40%. Investors have increased their share of new purchases, from 23.3% in quarter one to 24.2% in quarter three.
Supply and demand
Chris Kennedy, owner of Harcourts Gold in Canterbury, the heat is welcome news for homeowners in the region after a long period of low value growth.
The whole business of real estate is under pressure due to supply and demand, he says, noting that while there had been a big jump in property values this year, the number of sales fell from 786 last year to 556 this year.
“People just look at the median house price and say it’s gone up and it’s unaffordable but there’s a story behind it all, and that is supply,” he says.
“As the available stock coming to the market reduces the pressure on pricing is at a greater rate. But volumes of sales reduce due to the fact that there's limited stock.”
Kennedy doesn’t think there will be any reduction in prices because money is still relatively cheap to borrow, despite interest rate rises, and property in Christchurch is still comparatively cheap compared to homes in the other major cities.
“There are $500,000 houses in Christchurch, so it's an affordable place.”
The average property value in Christchurch hit $752,000 last month. Photo / Getty Images
For Aucklanders and investors, buying in Christchurch means spending less money but getting a similar percentage return. “At the same time, for the first time in a long time, you're getting growth in equity whereas you weren't many years back,” Kennedy says.
While that growth indicates Christchurch and its surrounds are returning to the real estate game, they are not seeing the “giddy heights” of other areas.
Kennedy doesn’t expect much to change next year, saying supply issues won’t be fixed overnight.
“Flooring, windows, drainage, plumbing - there’s a massive supply problem around the world and we’re at the bottom of the world.”
Hottest suburbs
The latest OneRoof-Valocity House Value figures show Christchurch's average property value jumped 34.5% ($193,000) to $752,000 in the last 12 months.
Of the suburbs that recorded 20 or more settled sales this year, Papanui recorded the strongest quarterly growth. The suburb's average property value grew 15% ($100,000) to $767,000. Also enjoying the heat are Burnside (up 14.2% to $885,000); Mairehau (up 13.3% to $623,000); and Wigram (up 13% to $833,000).
Ninety-six suburbs overall registered quarterly growth above the national average, with just one suburb, Teddington, registering a decline in its average property value (down 1.2% to just over $1m).
With an average property value of $1.731m, Kennedys Bush, on the southern fringes, is Christchurch's most expensive suburb for real estate, just ahead of Fendalton ($1.713m) and Scarborough ($1.709m). Homeowners in the suburb enjoyed growth of 12% over the last three months, so a future where Christchurch has a $2m isn't too far off.
Twenty-six suburbs have an average property value of $1m or more, up from eight in November last year, while the number of suburbs with an average property value of less than $500,000 has shrunk from to 39 12 months ago to 10.
The suburb with the lowest average property value is Birdlings Flat, on the city's southernmost fringe, but in Christchurch proper, the cheapest suburb for real estate is Aranui, where the average property value is $443,000.rchases, from 23.3% in quarter one to 24.2% in quarter three (so far their share in quarter four is 28.4%).
Catch-up
Justin Hayley, Bayleys residential & projects divisional manager for Christchurch, says he’s had one of his busiest years and that the company’s auction business will have doubled by the end of the financial year.
The lack of titled land has seen prices double since Covid arrived in the country and house prices are up 31 per cent year on year.
“Canterbury is finally catching up with the rest of the country. Post-earthquake, we had so much available land that hadn’t sold - that’s actually run out now.
“The market has reacted against all predictions. It's been driven by some key fundamentals - the shortage of supply, record low interest rates and a lack of ability for offshore travel including migration coming back as well.”
Haley has noticed Aucklanders (and even people in Australia) buying some properties sight unseen, but says it’s no surprise there is domestic investment given the city has been heavily under-valued for a long time.
A house on Ruebens Place, in Burnside, Christchurch, attracted eight bidders and sold for $1.548m. Photo / Supplied
“Pre-Covid we had close to 300 to 400 homes on the market and very few sales. Now we’re seeing record prices, multiple offers and sales that are exceeding expectations on a regular basis.”
Strong sales have included a house on Rubens Place in Burnside, Christchurch, which saw eight bidders place 70 bids before the four-bedroom property with three living spaces sold at auction for $1.548m.
And a house on Chaston Close, on the hillside in Westmorland, recently sold for $1.41m after a pre-auction offer of $1.15m saw the auction brought forward.
Haley says Lincoln, Rolleston and Prebbleton in Selwyn District are also very popular: “All that northwest outer area has really exploded.”
The only thing that might dampen the market is inflation and interest rates going up but nothing is likely to stall the market in a hurry, he says.
“I can't really see anything getting in the way between now and next spring. There's still room for the Canterbury market to grow, without a doubt. We're still behind Wellington and Auckland respectively.”
