The latest stats show that nationwide house prices are still on the upward trend, except for two regions: Auckland and Christchurch. Christchurch house prices “are all over the show”, we explain why and where.
According to data released by the Real Estate Institute, the median house prices in 13 out of 16 regions around the country have gone up compared to the same time last year. The exceptions were Christchurch or the Canterbury region, which experienced a price drop of 0.7 per cent, and Auckland, where house prices slipped 2.4 per cent year-on-year to a four-year low.
This update, however, will focus on the Christchurch property market, the biggest housing market in Canterbury, and one of the most significant in New Zealand.
Which areas are potentially fruitful for those selling houses in Christchurch? Which Christchurch suburbs have experienced the biggest hit in the asking price?
Kennedys Bush remains the most expensive suburb in Christchurch, with the average house price staggering at $939,000. Not far in second place is Fendalton, with average house prices of $936,000.
Despite the entire Christchurch area reporting a sweeping decline in house prices, Scarborough is one of the few exceptions. The average price for the suburb increased to $921,000. The next most improved suburb is Ouruhia, with an average price of $903,000.
On the other end, Bexley came in as one of the most affordable suburbs for house prices, at $110,000 on average. Aranui and Brooklands are also fairly cheap suburbs with house prices averaged at 278k and $211k respectively.
Right off the bat, one thing remains unchanged: Christchurch house prices continue to plummet despite home loan mortgage interest rates being at historic lows.
From a Canterbury point of view, the median house price in the past six months leading up to May 2019 was at one of the lowest levels we have witnessed in the past three years or so. In Christchurch specifically, the drops in house prices have been seen in several suburbs, including Redcliffs, Mount Pleasant, Northwood, Bottle Lake, Merivale, and Coutts Island.
Unlike property owners who are making capital gains by selling their homes in areas like Hawke’s Bay, Coromandel and Manawatu, Canterburians are struggling to recoup their money when selling houses in Christchurch.
In fact, the number of houses sold at a loss in the Christchurch property market rose from 10.2 per cent to 10.6 per cent. Those trying to offload their apartments were hit the hardest, with median losses of $46,500 which is more than double $20,000 for houses.
While Christchurch isn’t alone in terms of house price falls, some of the key reasons behind the slip could be unique to the region. Not all of them, though.
Too Many Houses?
Oversupply has always been blamed for the plummeting house prices in areas like Central Auckland, and it looks like Christchurch property market is struggling with the same issue. Hundreds of houses are added to the listing almost every month in the area.
The latest data seem to suggest that the supply of houses in the market is more than meeting the supply. The average “rateable” value of properties in the Christchurch housing market has remained almost unchanged in the past two years or so. The effect of too availability and new house development has traditionally been offset by influx of foreigners.
However, the government’s move to reduce foreign ownership has hit some suburbs in Christchurch. That’s why the median house prices in Christchurch have been falling significantly in the past several months.
Everyone is saying that home loan rates and traditional mortgage interest rates are at an all-time low. Despite this, most people in Christchurch and other districts in Canterbury have been struggling to secure credit. Of course, the banks, credit unions and top-tier lenders are reluctant to give home loans to first-time and high-risk buyers.
Affordability
Are Christchurch house prices out of reach for the average New Zealand property buyer? The latest statistics seem to say that is true.
That’s where the question of affordability comes into the picture. For most market experts, it appears that Christchurch house prices are keeping many potential buyers and investors out of the market.
In short, there are not a lot of potential buyers who are willing to be part of the action in the market, which gives the few the upper hand to negotiate the prices down. If the lack of buyers continue with the say trend, the downward pressure on Christchurch house prices can be expected to last for a few more years.
Remedial Work
While the Auckland market is known to be softening therefore causing house prices to fall, Christchurch price slip is largely attribute something different: the remedial work that is being carried out in several parts of the city.
How far can we expect the Christchurch house prices to fall? According to market specialists, stubborn sellers will ultimately determine the floor under which the prices will start to go up.
Owners of property in the city’s most expensive suburbs are less likely to be enticed to start selling their houses in Christchurch. They may have to wait a little longer for better prices.
Still Waiting for Christchurch House Prices to Go Up?
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