Christchurch house prices may pick up as city buyers enjoy most affordable market in more than a decade
Friday, 27 July 2018
Christchurch homes are at their most affordable for more than a decade, but buyers sensing bargains could start driving prices back up.
A new report from property researcher CoreLogic suggests that after several years of flat prices, the city's housing market could start to turn.
'We are maybe seeing the first hints of a sense that things are starting to turn up again,' CoreLogic research analyst Kelvin Davidson said.
'I'm detecting some anecdotal evidence that it could trend up. It stands to reason – prices have been flat for so long.'
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The latest home affordability report from interest.co.nz found Christchurch homes are at their most affordable since the research began in 2005.
It said an 'average' young working couple would take four years to save a first home deposit. They would then need 20 per cent of their income to pay their mortgage, down from 22 per cent last year.
Anything under 40 per cent is considered affordable. The report attributed the improvement in affordability to house prices staying flat while incomes have increased a small amount and interest rates dropped slightly.
Urban Edge Valuations property valuer Natalie Edwards said it was 'a big call' to say prices would rise, and instead expected 'muted' prices for the next year.
Prices were 'a bit hit and miss, it depends on the property', but it was 'definitely a first home buyers market', Edwards said.
She pointed to a lower auction rate, and more fixed pricing, as an indicator of sluggish values.
New home owner Grace Brown said she would be happy to see values rise 'but that's not really why I bought. It was to have something on my own.'
Brown took a few months to find the two-year-old Burwood house she bought earlier in the year, using a deposit saved with the help of KiwiSaver and her parents.
She found Christchurch prices were what she expected: 'I'd lived in Auckland before and that was ridiculous.'
CoreLogic, which provides data and analysis for state-owned valuer Quotable Value, records Christchurch's median home value as $494,707.
Real Estate Institute figures show the city's median house price is about the same as three years ago.
CoreLogic's figures also reveal the city's two dearest suburbs are on the Port Hills. Scarborough is the priciest followed by Kennedy's Bush, both with a median value of just over $1.1 million.
The cheapest suburb is Phillipstown followed by Aranui. The median home value for both is just under $290,000.
Davidson said 26 per cent of buyers were first timers, making Christchurch the main centre with the highest proportion of first home buyers.
Earlier this year first-time buying in Christchurch reached record levels as buyers took advantage of conditions described as ideal.
Owners with more than one residential property now had a smaller share of the market than at any time in the last seven to eight years, Davidson said, but with values flat some investors might reconsider.
'It's possible that if investors start to see bargains over the coming months, the first home buyers will start to face stronger competition.'
'There seems to be a small groundswell of opinion that Christchurch could be ready for the next upswing, as long as there are jobs and the supply/demand balance is favourable.'
This could happen as interest rates looked like remaining low for some time, Davidson said.
However, Edwards thought that with borrowing no longer easy for investors and rents having fallen, few were keen to expand their portfolios.
Real Estate Institute director Jim Davis said good numbers of people were inquiring about listings and attending open homes, but there was 'no sense of urgency to make quick decisions.'