Harcourts’ South Island Regional Manager, Jim Davis, comments on the Christchurch real estate market.
With the release of the latest REINZ property market data for the month of October, it is likely the comments I will make around the report will come as no surprise to anyone. The current buoyant state of the property market is a hot topic across all media outlets and there is no doubt our market has reacted quite differently from what was expected and predicted by the commentators just 6 months ago. But with the underlying strength and the hype that is developing around our market now, there are very few commentators who would pick it is going to change much in the foreseeable future.
In a nutshell, property is in huge demand right around the country with almost every region experiencing either a record median price increase, a record number of sales or a record minimum days on market figure.
Looking first at the national monthly results, the median sale price is recorded at $725,000 for October 2020, is in comparison to a recorded median of $605,000 in October 2019.
The total number of sales recorded across the country in October this year is the largest October result recorded for 14 years and the highest monthly total in the last 53 months.
The recorded days on market has dropped nationally to 29 days which is the lowest recorded figure in 17 years. When we look at all this, there can be no doubt in anyone’s mind that there is huge pressure on our housing situation across New Zealand.
Here in Christchurch the sales figures results reflect what has happened nationally. While the 755 recorded sales in Christchurch isn’t a record, the number is right up there. Our days on market figure is 28 days which is slightly shorter than the national figure and our median is now a healthy $$526,000 – a new record high.
It is reported that close to a quarter of all property sold in NZ was sold by auction in October, here in Christchurch where we lead the way in auction culture, I suspect this figure could be a lot higher. In the case of Harcourts figures for Christchurch, we had a huge listing month throughout October. This is in fact the biggest in the last two years and in our case over 45% of our listings were listed as auctions. Love them or hate them there is no doubt that auction is the simplest and fairest way to sell property in a market like this. When there is so much buyer interest in the marketplace, the ability for someone to transparently see who they are bidding against and as a buyer it gives you the ability to make a conscious decision as to whether you are prepared to offer more than the last bid. We have lots of feedback from happy clients who say this method of sale is better than the “smoke and mirrors” perception of other marketing methods.
So where to from here for the market in Christchurch and in fact in New Zealand? There is no doubt that the commentary and rhetoric is changing from the media commentators. The feeling is that we are not in a bubble. The comments definitely suggest we are heading into a sustained period of price growth and increasing buyer interest from the existing market. While some of this past buyer activity has been typecast as people having a “fear of missing out “FOMO”, I believe there is in fact a much stronger underlying basis. The expectations long term have changed so that when the world gets back to a little more normality, perhaps borders reopen or space is available in quarantine facilities etc, then we will see the “brain gain” back into New Zealand from the returning kiwis and their families. Talk is now that over the next few years we could see as many as 250,000 kiwis and families looking to beat the rest of the world to our door. If this prediction is in fact true or even close to reality, then our current housing market will not be slowing down any time in the near future. Even if it’s not true, have no doubt the pressure from a large number of other people from around the world to get to the safety of New Zealand will be huge.
If you are wanting to get into the market for the first time every indicator says now is that time. If your local market is outpricing and outstripping your ability to save, perhaps look further afield and consider the possibility of staying where you are currently but purchasing a property in another area to rent out. This way you can dip your toes in the water and get that start.