HARCOURTS GOLD CHRISTCHURCH MARKET REPORT SEPTEMBER 2023

The Christchurch market’s improvement continued into September 2023 despite anticipation of the election.

Past election cycles give evidence of a market slowdown just prior to each election and then a post-election rebound in sales activity. Holding off was a factor in September 2023 with residential listings being just 0.9% up from last year when the market decline was hindering a commitment to list. Realestate.co.nz data shows total number of listings available was 1.6% less than properties advertised to buy in September 2022. The advancement of the market this year and our Garden City reputation for bringing properties to the market through Spring could mean an influx of fresh properties for the market to consider. Good news for those competing for the types of properties that first-home buyers seek. This part of the market remains strong with first-time owners still making the largest contribution to house sale numbers in Christchurch over September.

With the OCR holding and interest rates still higher than comfortable for most at the current house price level, will the increase in listings lead to a longer time to sell and a slow in house prices due to less competition amongst buyers?

We can probably point to the election again for the most likely reason our sales numbers decreased between August and September 2023, though nervousness about interest rates and cost of living continues to play its part. First-home activity has contributed to a month-on-month Christchurch median sale price increase with a jump of $30,000 compared with August 2023. The REINZ median of $681,000 is essentially the same as this time last year, which shines a light on the journey between times. Compared to September 2022 Christchurch was up 49 sales on the number of sales that took place during the month. September produced 526 residential sales versus August’s 569 sales. Price expectations remained steady with asking price averages sitting at similar levels month to month.

What’s the price of happiness in Christchurch? Some would say the lifestyle, Hagley Park, the short commute, the sea, and the mountains, it doesn’t have a price, money can’t buy happiness after all – or can it? Recently researchers at Purdue University say their study shows there is a specific dollar income you need to be truly happy, depending on where you live. The price of happiness in Christchurch was cheaper than any other urban area in New Zealand however rural communities world-wide were happier with less. In Christchurch the price was suggested to be $180,000 per annum to be content, the price at which happiness stops improving. Cost of living impacts the final figure though more significant in this instance was the buffer away from unhappiness.

A longstanding ratio used to calculate mortgage affordability is the 28/36 rule which says standard homeownership costs such as rates, insurance and mortgage should be no more than 28% of income. If we use today’s median sale price for a home ($681,000) assuming 20% deposit, since low deposit mortgages are restricted, at an interest rate of just over 7% over 5 years for a 30-year term, the weekly repayments would be about $1,055 - nearly $55,000 per annum (30%) of an annual income of $180,000 – before Christchurch rates or insurance are included. Perhaps then it’s not surprising people were unhappy with the current market conditions, especially where the interest rates recently began at as little as 2-3 percent.

Now that we are through the pinnacle weekend of the election, we wonder what the future holds a little less and the question becomes when. How will a National lead government affect the economy and housing market? Not quickly might be the answer as we wait firstly for the Government to be formed. Will the wait and see approach continue for some time longer or will investors settle in with the faith that interest deductibility will return? Will Christchurch be paying more tax on our income bracket soon? Is there relief from the Brightline test decreasing to 2 years? Will there be more homes built for the New Zealand migrant arrivals totalling 225,000 (115,000 left the country)? This was a record high in October for annual net migration, rising above 100,000 for the first time. Will the return of foreign home buyers make prices go up? With unemployment under 4% and more jobs coming available, alongside annual inflation at 6 percent in August, the Reserve Bank will continue to watch the trends closely.

A summer market with similar tendencies to the existing patterns could be realised before any major changes from a new Government or delivery of policies comes through. The median price and number of days to sell has already improved so a steady as she goes summer will still turn up good opportunity. A few months in a row with increases in house sale numbers would cement the Christchurch markets recovery from the re-set period post-Covid.

REINZ Figures Median $681,000 | Average $782,555

Harcourts Figures Median $740,000 | Average $847,016