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Centre Of Attention

A revitalised Christchurch offers a heady mix of sophistication and easy living, short commutes and affordable housing, writes Sally Lindsay. Images courtesy ChristchurchNZ

By: Sally Lindsay

31 January 2023

There’s been a sea change in Christchurch’s central city, not just the buildings popping up and the gravel car parks disappearing: It has become a mosaic of little neighbourhoods, each with its own personality.

The retail district is the heart – walking streets and mixed-use zones have spread out from Cashel Street, filled with stores ranging from hyperlocal boutiques to high-end international brands, with spots of activity gathered around live musicians, street food and artists.

Across the river an arts and heritage district is fully fledged. Its staples are the Arts Centre and the redeveloped Canterbury Museum, but its crowning glory is a brand new high-rise in Cambridge Terrace – a development that houses contemporary international art and projects 3D installations onto the footpath.

The Victoria district has become an inner-city extension of exclusive suburbs, Fendalton and Merivale, where flashy homes and luxury accommodation are a stone’s throw from fine dining and high-end boutique retail stores.

Diametrically opposite, the SALT district’s High Street offers a grittier alternative. Some of the city’s most legendary bars and cafes have established themselves here, along with uber-cool retail offerings that include up-and-coming designers and tech-savvy tattoo parlours that can implant the latest technology in your body.

The southern central city has become a place where the industrial brushes residential and retail: it’s a hub of microbreweries and roasteries, and there’s even a new urban winery with a multi-storey hydroponic vineyard.

THE PLACE TO BE

Meanwhile, the East Frame has become the place to be – flats of 20-somethings live in between growing families and high-powered executives, who all bump shoulders in the shared space. A walk around the ‘hood reveals a thriving network of community gardens where residents pick herbs, take cuttings, pick up produce at honesty boxes, and socialise with their neighbours. A sprinkling of mature native trees are regular hangouts for tui and korimako which have long been central city residents thanks to extensive planting.

Thousands have flocked to the central city to buy more minutes and hours by cutting out the hustle and bustle associated with living miles away from the best things in Christchurch. And what are they spending the new currency on? Time to get home and relax after work; time to BBQ with friends on a Saturday afternoon; time to watch the family grow; to drop into the local for a drink and a yarn before a big gig at the arena; to take in every little thing this future-focused city has to offer.

Unlike most suburbs in New Zealand many of these inner-city suburbs have retained healthy growth from Addington at 3.8 per cent to Sydenham at 0.7 per cent, while flashier areas such as Fendalton, Riccarton, Bryndwr and Ilam have dropped in value from 0.1 per cent to 3.4 per cent.

Smart Real Estate director Debra Hakaraia, who has 18 years’ experience in the housing market, says Christchurch has been different to Auckland and Wellington in that prices have not fallen as much.

REINZ data shows at the end of last year the median price for Canterbury properties was down just 3.7 per cent compared with December 2021. In contrast, the median price in Wellington plunged 20.2 per cent annually; in Auckland it dived 18 per cent annually.

“Canterbury didn’t have the big leap in prices that other regions saw over 2020/21 because of the 2011 earthquake and the extensive rebuilding programme afterwards that evened out the housing supply. That meant it didn’t have the big fall in prices.”

Hakaraia says that is not to say the market has not been difficult, particularly for apartments in the central city and suburbs within walking distance of the CBD. Prices have pulled back quite a bit.”

She recently sold a Sydenham property she originally thought would have fetched a decent price. She didn’t receive any inquiries for several weeks and after a price drop it sold to an investor for the same price the vendor bought it for in 2019. Another recent sale of a property bought in 2020 sold for less than it was purchased, while another where the vendor wanted in the high $500,000 to $600,000 range came with market feedback of $480,000 as the price buyers were willing to pay.

Punting past the Te Pae Christchurch Convention Centre along the peaceful Avon River.

ABOVE Apartment building in the vibrant SALT district.

OPPOSITE CLOCKWISE FROM TOP LEFT Margaret Mahy playground fun; a Victoria Square meet; Christchurch Art Gallery; Cashel Street Mall shops; Zodiac Asian Fusion Restaurant.

VENDOR EDUCATION

In yet another deal the vendor who wanted $600,000-plus received an offer of just under $580,000 as a builder’s report said it needed a new roof. Instead of taking the offer the seller would not budge, kept the property on the market and is now getting market feedback of $550,000 as an acceptable price.

“We are back to the days of having to educate vendors on shifting market dynamics and lowering their price expectations to meet those of buyers,” says Hakaraia. “Often this needs to be put in writing so vendors understand how the market is moving and can make informed decisions.”

For all the testing sales there are still plenty of straightforward deals being done at prices sellers and buyers are happy with, despite banks tightening lending criteria again recently, making it difficult for borrowers to get enough money for properties they line up as possible buys.

“There are plenty of people attending open homes, with buyers trying to get the best house possible. First home buyers are active in the market to a degree, but cautious.

“Christchurch central is regarded as desirable because of what the regenerated city has to offer and the good school zones, but there is limited serious interest similar to most of the city.”

As a result it is taking longer to sell properties, on average up to 33 days, which is more than the 10-year average. There were 18 weeks of inventory in December last year, which is 11 weeks more than the same time in 2021 and the sales count was down 32.7 per cent.

Investors are wanting bargains and are not afraid to put in offers well below the asking price. Once the Sydenham property fell 40 per cent below the asking price the investor buyer snapped it up straight away, says Hakaraia. “It is not hard to get investors over the line if the price is right, but they definitely don’t want to pay what vendors are asking.”

A recent sales issue has been apartment complexes built in the past two years without car parks. “While investors will overlook it, first home buyers, in particular, and owner-occupiers only want properties with off-street car parking and that usually means a garage attached to the house or apartment. Properties without on-site
parking are proving to be more difficult to sell in a tough market.”

Although well capitalised bigger builders carry on no matter the market conditions, Hakaraia has noticed more sections coming on to the market for sale. “In this type of market the gap between the larger developers and the tier below becomes obvious. The second tier struggle to get projects off the ground or decide not to do them and put land they had banked on the market to provide some capital if it was bought at a good price originally.”

APARTMENT SCENE

Renters have also been facing a tougher market in Christchurch. Although there are more than 800 properties for rent, it is a drop from the 1200 to 1000 properties usually available.

Whittle Knight property management manager Tania Ellis says the drop in rental properties is because many have been sold and permanently removed from the
rental market. She says while there are enough rentals in the city it could always do with more in Fendalton, Riccarton, Ilam, Upper Riccarton and Bryndwr.

There are new properties being added to Whittle Knight’s property management book, particularly units and townhouses in the CBD, Addington, Phillipstown and Sydenham areas where there is a lot of new development.

Ellis says the market has fluctuated in recent years, mainly after the earthquakes which affected the supply of available rentals. With fewer properties available, rents increased.

She says new subdivisions throughout the central city, and more medium density housing built post quakes, have provided more opportunities for rental housing and with more properties available rent prices adjusted and stabilised for several years.

“The rental market has mostly been stable with minor increases yearly driven by the fact that we have always had sufficient properties to rent – unlike other areas of New Zealand. Now the market has fewer rentals available we are seeing more significant increases than previous years.”

In the central city there has been a proliferation of apartments, some might say too many, says Ellis, and the challenge with some of these new complexes is their small size and lack of parking. They do eventually rent out, but it can take more time to find the right person and the rent eventually achieved may be less than the developer has forecast in the sales brochure.

“The early part of the new year is always a popular and busy time in the rental market as many people look to move during this time. This year is no exception, although there are fewer properties available than previous years.”

GARAGE ISSUES

Ellis says all areas are popular with renters, provided the property is new or modern, well presented and priced correctly.

Rents vary on whether they are houses, townhouses or units, new, modern or older style and the location. The Riccarton and Ilam areas have many student properties and student property rents are generally higher so this affects the averages.

Ellis says there is a surplus of new two-bedroom townhouses and they can be challenging to lease if there is no garage or off-street car parking. “It can be considered a safety issue if tenants need to park their car streets away because the nearby streets are full with other cars.”

She says it is rare to list a two-bedroom home in Addington, Sydenham, Fendalton, Riccarton, Bryndwr and Ilam for less than $400 a week and some can lease for as much as $540-$550 per week if they include a garage and are spacious.

Three-bedroom homes are more popular and desirable. “Any three-bedroom home that we list for rent can fetch anywhere between $550-$650 per week. Eighteen months ago this was the rent for a four-bedroom home.”

Viewings are popular and renting a property can sometimes result in only one viewing to secure a quality tenant, or sometimes it can take up to six to seven viewings. Ellis says her property management team is finding people viewing are more aware of the Healthy Homes legislation than previous years.

She also says many property management companies are keen for the industry to be regulated and Whittle Knight believes it is better for owners and tenants.

THE DATA

Rental data is sourced from the Ministry of Business, Innovation and Employment based on rental bonds lodged. This data is supplied to us grouped into geographic
areas based on statistical area units used by Statistics NZ for the census and as a result do not always match well with common usage suburb names.

The rental data for each area is matched to property price information from our database to determine property prices and therefore yield. The yield is calculated as the annualised rental income divided by the median property value calculated using our E-Valuer.

MARKET COMPOSITION

The rental market in Central Christchurch is dominated by houses, but with a reasonable spread of apartments and flats. Of the 1014 properties recently available for rent, 672 have been houses (66 per cent), with 213 apartments (21 per cent), and 129 flats (13 per cent).

Starting with flats, the most have recently been for rent in Linwood/Phillipstown (51), and it’s also had the highest concentration rate (27 per cent). By contrast, Sockburn/Upper Riccarton, Ilam/Westburn, Fendalton/Strowan/Bryndwr, and Addington haven’t recently had any flats for rent. The most apartments have been in Avon Loop/Christchurch East (72) and Christchurch Central/Hagley (48).

Switching to houses, the largest rental markets lately have been Riccarton (111) and Sydenham/Waltham, with those areas also having a reasonable concentration
rate for this property type. By contrast, an area such as Merivale/St Albans West has a more diverse stock of rentals.

HOUSE SIZE, BY BEDROOM COUNT

Looking specifically at houses (672 properties), none recently for rent have had five bedrooms, with only 8 per cent in the one-bedroom bracket and 9 per cent with four. This means that Central Christchurch’s stock of houses recently for rent have been concentrated towards the smaller end of the spectrum, with 34 per cent in the three-bedroom bracket (231), and 49 per cent with two (327).

Avon Loop/Christchurch East is the largest market for one-bedroom houses for rent, while Riccarton has the most four bedroom properties.

Turning to the three-bedroom house category, Riccarton (42) and Linwood/Phillipstown (36) have had the most recently for rent, although Sockburn/Upper Riccarton and Ilam/Westburn have higher concentration rates for this property size amongst all houses recently for rent.

Riccarton and Sydenham/Waltham are key markets for two-bedroom rental houses, although the highest proportion is in Christchurch Central/ Hagley (61 per cent).

RENT AND YIELD

By matching average value to rent we can look at gross yield for three-bedroom houses in each area.

Median weekly rents for three-bedroom houses in Central Christchurch range from $480 in Linwood/Phillipstown up to $625 in Merivale/St Albans West. However, the range for property values is quite a bit wider, from around $540,000 in Linwood/Phillipstown up to about $1.29 million in Fendalton/Strowan/Bryndwr.

This produces quite a wide spread for gross rental yields too, from just 2.4 per cent in Fendalton/Strowan/Bryndwr up to 4.6 per cent in Linwood/Phillipstown.

By way of compensation for low rental yields in some parts of Central Christchurch at least rental growth over the past year has been pretty strong, typically about 7 per cent or more, and as high as 20 per cent in Merivale/St Albans West. On the flipside, rents have fallen in Christchurch Central/Hagley.

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