Christchurch Real Estate: April Update

Harcourts’ South Island Regional Manager, Jim Davis, comments on the Christchurch real estate market.

The release of the latest REINZ data shows Christchurch and Canterbury pricing holding steady despite falling sales volumes across the region. This trend goes against what is happening in most other regions around the country, where the median sales figures are lower alongside the drop off in sales numbers.

This drop off in sales numbers across the country has been predicted and commented upon ‘ad nauseum’ by all commentators. Changes in lending criteria, more restricted access to finance, increases in interest rates and global uncertainty are all factors that will definitely slow sales volumes. There is no doubt that the market we had 12 months ago was always unsustainable, but that rampant market is what we are now comparing ourselves to, so it is not a complete surprise that we are now seeing volumes drop off with all the headwinds we are currently experiencing.
What is interesting is that Christchurch and Canterbury are bucking the nationwide trend where property values are concerned. Normally with a significant drop in volume, the median sale price also typically drops. However, based on the current sales data, the median sales price across the city has remained constant over the past couple of months.

I have commented previously that I don’t expect to see property sales values drop away significantly across our city or the region. There is no doubt that we have outside factors that should see values drop away (and ultimately it is likely to happen), but hopefully not to the extent anticipated by some.
Christchurch in particular has some interesting aspects attached to it where it may not be unexpected to see us following a different trend. It was only a few short months ago that the same commentators were reporting on how undervalued Christchurch and Canterbury property prices were.
In the years pre-Covid, we had a very flat price point here in Christchurch because we had so much development and construction happen in our surrounding areas. Our local housing companies were all competing with the same consistent product at similar values, hence we were not seeing significant lift in our median sales price due to the plentiful supply of similarly valued properties.
Over the past two years, with the demand we experienced, the same rapid price growth experienced by all cities and regions around the country also occurred here. The economic environment is different now for everyone, plus we have the added issue of inflation and supply chain issues that are now causing rapid increases in construction costs. In the past, any time the cost of construction starts to increase, we typically see the value of existing homes increase, as well as the cost benefit ratio of new versus second-hand starts to impact on buyers’ thought processes.

Over April we have seen sales across the city drop down to 497 from the 700+ sales reported both last month and also April last year. The average days on market have extended to 31, but that’s not an unusual thing to happen based on the length of time it now takes for people to secure finance. As previously mentioned, the median price remained steady at $710,000, identical to the previous month. Initially, it could be argued that the issues making it harder for first home buyers to secure finance could be skewing the market stats, however the latest data indicates that first home buyers still make up around 22% of the total market so I am not convinced that is a relevant argument.

The real test of where we are in Christchurch and what is likely to be our market over winter will show up with next month’s data. April was a disjointed month with two long weekends and school holidays as well, typically times where activity levels among buyers drop away. However, that will not explain a 30% drop in sales numbers so I expect the real test will start to show up in next month’s data. Interestingly, looking back at old pre-Covid data, a typical month in Christchurch always used to be around the 500 to 550 sales so April’s 497 is within the bounds of what we used to see before the world went crazy.

Where to from here if you are in the market currently or looking to sell in today’s climate? Relevant,
up-to-date and reliable information is paramount. It is important to ensure that you carefully look and think of what is best for you and your family. Now more than ever, it is more important to have a large team representing you and not a lone operator who only ever sees one small part of the market.
Each month we publish the data so you get the opportunity to make a full decision on which sales option will work best for you. This month the data further reinforces what we call the ‘Harcourts Advantage’.

All April sales for Christchurch City
Median – $710,000
Average – $799,661

Harcourts April sales for Christchurch City
Median – $730,000
Average – $853,362

As a potential seller, what you need to be asking is “Do I want a full-sized,
well-resourced, well-trained team who are looking to sell my property for the best possible price, or am I going to choose who sells my family home based on the cheapest price?” Cheap is ‘cheap’ for a reason. In the current economic climate, read the data, do your homework and make the right decisions for you and your family. Talk to Harcourts, we are a Christchurch favourite for a reason.