Garden City Blooms
After a long period of sluggish price growth, Christchurch is now seeing house price rises across the board, writes Daniel Smith.
31 January 2021
New Zealanders around the country who tuned in to the New Year’s cricket test match were afforded a small glimpse of the tranquil beauty that is Christchurch in the summertime. As the camera flew high above Hagley
Oval, the verdant greens of the park rolled back towards the city, and the shimmering glint of the Avon River twinkled as punters rowed along.
The sight was enough to confirm to any doubters Christchurch’s name as the Garden City. It seems that no other city in New Zealand has faced as many challenges as Christchurch over the past decade. But despite the hardships, the City’s natural beauty, pace of life and a plethora of opportunities for growth have continued to provide a steady stream of investors with potential in their sights. In the aftermath of an incredible year, it is with excitement that many in the Christchurch property market are looking forward.
In the past year Sockburn, Linwood, Phillipstown and Addington have all seen growth of over 5%. Investors have told us that the market is the hottest it has been in recent memory. But the Christchurch housing market has its own series of challenges that must be met in order for investors to lock in returns.
As we move into 2021, Christchurch has revealed itself as a key region for property investors across the country to watch. We dive into the ins and outs of what investors need to know in order to turn a profit in the Garden City.
Market Is Hot For Those That Can Handle The Heat
Persephone Singfield of iFindProperty says that Christchurch is seeing the market at the most fever pitched in recent memory.
“The Christchurch market is definitely the hottest it has been since the GFC, and it doesn’t look to be slowing down with interest rates being as low as they are.”
But while the heat of the market seems here to stay, Singfield has a caveat for those would-be investors looking to cash in. “I think investors need to be prepared to make their returns, rather than just buy them.”
What Singfield means by this she illustrates with an example, “At the moment I am looking at a multi-income property that when building reports were done before it went to auction it was found that the house was out of level. You can’t get a house insured in Christchurch that is out of level. This is a great example of making the returns as opposed to buying it. Most buyers could not access this property as it requires a cash investment or a huge amount of local knowledge to feel confident in moving forward with it.”
“The investor who has the resources and the knowledge can make it work, but there have been so many people that have been burnt in Christchurch purchasing these properties with no experience.”
‘The Christchurch market is definitely the hottest it has been since the GFC, and it doesn’t look to be slowing down with interest rates being as low as they are’ PERSEPHONE SINGFIELD
Singfield says that the investors that are doing well are those that understand that in the current market, “there are no deals, unless there is something wrong with [the property]”.
Like a lot of other places around the country, first home buyers are adding more competition for property. But Singfield believes there is still room for investors who are willing to look for creative opportunities for returns.
“I would advise people to look at the new infrastructure. The northern motorway has just been completed, which gives access to the northern suburbs to those who commute to the city for work.
We saw a similar thing a few years ago when the western motorway opened up which offered opportunity to the little towns outside of Christchurch which are now becoming suburbs. We are watching these areas closely to see how they are going to unfold.”
Nick Cowdy from Cowdy Real Estate believes that the current heat we are seeing in the Christchurch market is all related to stock levels. “We haven’t had the drop in stock into the new year yet, but it was tight last year and it is looking like those stocks are going to stay tight this year.”
Cowdy says that because of the stock levels investors are going to see prices get squeezed higher. But the prices in some areas are rising with more gusto than in others. “You’ve got Addington, Riccarton, Central City fringe, Central City, Linwood all these residential, medium density suburbs surrounding the city are going really well.
The market for those areas tends to be investors, home-buyers and developers so you have a huge chunk of the market interested in those zones.”
On the flip side of that the developers are putting in new town houses in Addington and surrounding Central suburbs, as well as Sydenham are making it easier for first home buyers to get a foot on the ladder. Cowdy says that “any suburb where there is a presence of first home buyers is really going for it.”
In terms of his personal pick for a suburb to watch in 2021, Cowdy recommends keeping an eye on Mt. Pleasant. “I’m not sure why but I think that Mt. Pleasant has has been seriously undervalued. It has a lot of hill properties that people may have been nervous about after the quakes. But you get a lot of house for the money there, you get a wonderful view and it’s not too far away from town. It’s definitely my pick for an undervalued suburb to watch in 2021.”
Rental Supply Low
According to Tessa Keeling, owner of Quinovic Riccarton branch, 2021 is “going to be a very busy year in terms of new investors in the market - we certainly are seeing a lot of action coming down the pipeline.”
The start of the year is always a busy time for property managers but Keeling says that 2021 has felt particularly strained as the “new-normal” brought in by Covid-19 has meant that a lot of houses that would have been coming to market have remained inaccessible.
“We would normally like at the end of the calendar year to go in with as few vacant properties as possible. But normally by the time we get into the new year we get quite a few because you have tenancies ending. But a lot of people have stayed in their rentals which has meant that overall there are less properties available to rent.
“Our board of vacant properties probably reflects the market quite well, and at this point we only have five or six.”
But although the rental market is seeing a squeeze in vacant properties, at the same time city infrastructure is opening up other areas to investors. Keeling says that “Rangiora is an interesting example. We have been building up properties in that area quite quickly and that’s because with the new motorway going in the towns outlying Christchurch are seeing quite a lot of interest.”
The character of Christchurch is changing and is becoming popular with young professionals. FROM TOP The Terrace; tram passing through New Regent Street; riverside markets.
As well as civic infrastructure, Keeling says that this shift has also been caused by “Covid possibly causing people to feel that they want a bit more space in the countryside. That is now available within an easily commutable distance.”
Keeling says that already 2021 is showing that the action is going to be hotter than last year for investors in the market. “I think we will see a lot more investors in the market. This is going to cause the demand for rent to keep increasing. Possibly not as drastically as we have seen in Auckland, but investors in Christchurch should expect a steady rise.”
For Shirley Berryman it is an exciting time to be a property investor inChristchurch. Berryman is the president of the Canterbury Property Investors’
Association, and she says that Christchurch has “come through such a long flat period from the earthquakes. Everyone knows that the housing prices in Christchurch and even greater Canterbury have been pretty slow because of the hit we have taken, but that has also made the situation unique in New Zealand.”
Berryman says that now that prices are starting to move up the investor community is “really looking forward to things starting to move down here. House prices have risen 11% in Christchurch in the last year, and in wider Canterbury they rose by 13%.
These numbers are certainly boding well for things down in this part of New Zealand.” Although she welcomes the rising prices, Berryman says that the changing investor landscape presents its own challenges. “With houses selling for more it becomes more difficult for investors to find a property that they can buy at a reasonable price to get a good return on. Finding things becomes more challenging, however I have heard that there are still bargains to pick up for those investors willing to think outside the box and get creative with their location selection.”