1 Nov 2021

Christchurch housing remains affordable despite rising prices

8:19 am on 1 November 2021

After years of slow growth, property prices in Christchurch are all of a sudden surging ahead and fast catching up with the rest of the country.

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Photo: RNZ / Cole Eastham-Farrelly

Figures from Quotable Value showed the Garden City out performing all of the major centres in the three months to the end of September, with prices up 7.7 percent.

So could Christchurch be about to lose its mantle as the country's most affordable city?

Richard Tait managed a Harcourts in the commuter town of Rolleston and said prices were rising faster than he had ever seen before.

"I saw one recently where a guy had paid $469,000 for it and I sold it in August the following year for $775,000. So there's a bit of a change."

And it appeared cashed up buyers from the North Island might be at least in part responsible for some of the eye watering sums being paid for what were once affordable homes.

Tait said some weeks up to 30 percent of the buyers he saw were from out of town.

"[There is] I think a certain impossibility of getting on the property market in Wellington, Auckland, Hamilton or Tauranga, so people are coming down here. I've got a guy in Tauranga who rang me today because he'd given up hope of buying in Tauranga and is now looking for a house down here."

And the growth was not just a one off, with QV showing prices were up by 5.8 percent in the three months to August as well.

The suburb of Linwood in the city's east had long been a place where first home buyers were able to get good value for money.

RNZ hit the streets to see if that was still the case and ran in to John Billingsley.

"My boy just paid $415,000 for a house that had a value of $330,000 [in December]. Now it's worth $525,000. And I know a lot that are heading south as well. A friend of mine's going to live in Timaru, another to Waimate and they're getting mansions for what they're selling their houses here for."

Economist Tony Alexander said there was no doubt out of town investors were now attracted to Christchurch where prices were still only half what they were in Auckland and Wellington, and where they could achieve much better rental yields.

"And I think especially young people finding property unaffordable in the other major cities realising they can shift down to Christchurch and still have good work, good incomes, be on the corporate career ladder, and buy a more affordable property."

But an economist with the council run development agency Christchurch NZ, Jorge Chang Urrea, said the city wasn't ready to completely relinquish its title as the most affordable place in the country just yet.

"For example in greater Christchurch and Canterbury, approximately 18 percent of people's income goes into their mortgage and the Auckland region it's almost 40 percent. So if you take into consideration income as well, Christchurch is still the most affordable city."

Crucially new homes were still being built in Christchurch, with consents up 67 percent on last year, meaning supply would very soon catch up with demand and take some of the heat out of the market, he said.

Tony Alexander was also of the view that prices were not about to get completely out of hand, mostly due to the impact of rising interest rates between now and the middle of next year.

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