Christchurch Real Estate: May Update
Harcourts’ South Island Regional Manager, Jim Davis, comments on the Christchurch real estate market.
We are now well into the start of the winter months, a time when the market traditionally starts to show signs of slowing down after the frantic summer months. With the full-on market, there has been pressure felt across the country. Additionally, there has been added scrutiny from the Government and measures introduced to curb price growth on property. As a result, there has been even more media scrutiny on the market and the messages in the marketplace have been mixed and vague at times, adding to the pressure.
Talking with buyers it would seem that when a commentator suggests ‘price growth is slowing’, their interpretation or hope is that this means prices might be/are dropping. However, as the market continues and rolls into winter, it looks increasingly like this will not be happening for a while. In fact, the most recent headlines we are seeing are, “House prices grow by a record-breaking 17% in one year” (Scoop Business, 8th June) and “Double-Digit Home Price Gains Boosted Home Equity to New Highs” (Derived from Data News, 11 June). The Real Estate Industry has just released (June 2021) the combined sales figures for the month of May, along with the headline, “House price rises continue; Auckland hits new record median price again.”
Quite simply the upward pressure on house prices is still here and along with Auckland, we see Christchurch has also just set a new record median sale price figure over May. The just released figures tell us that there were 722 sales in our Christchurch Market, the new median sale price was $600,000 and average time on the market was 26 days. The issue for every buyer, the industry and the Government is the fact that there is an all-time low level of stock available for sale. While there is this massive shortage of availability, we can expect to see huge pressure maintained on sale prices. The real issue is not investors or even people buying extra houses, it is quite simply that we have more people wanting a roof over their head than we have houses available. This shortage will not disappear quickly and in fact will likely take years to be addressed as we simply can’t build homes fast enough to meet demand.
Over the coming months I have no doubt we will see fewer and fewer homes available for sale. This will mean in number terms that we will likely see the volume of sales decrease, but I fully expect that just as sales volumes decrease, sale prices will continue to lift. In simple terms a full MIQ bed is typically another Kiwi returning home and they need somewhere to stay like everyone else, so it’s either at home with mum and dad, a flat or they need to buy for their family.
The best indicator of expectation for what might happen in the future is the HPI, (House Price Index). This is a theoretical index derived from a formula that has followed trends and figures and is updated with actual results in real time. Quite simply, if the HPI is rising it is essentially indicating the expectation that the house prices will continue to lift. The Current HPI for May is 3122, which is up another 1.2% on last month. So even the theoretical signs are mirroring what the facts are saying and what our gut is telling us.
For Harcourts here in Christchurch, we are seeing the same trends as shown by the market. Our stock levels are at the lowest we have ever seen; sale price is still facing huge pressure and sales volumes would be a lot higher if we had more stock. It is when we look hard at the sales results we see where the Harcourts system really shows through for people looking to sell. We know from the figures that Harcourts sold close to half of all the property sold in Christchurch in May.
REINZ tells us the median sale price of all property sold was $600,000 and the average sale price was
$706,423 over the month of May. Harcourts Median sale price achieved was $676,500 and the average for our sales was $810,305, across Christchurch during May.
If you are thinking of selling in this current market you need a company who will achieve the best possible price the market is prepared to pay. This market is not going away in the short term and we can’t control it or slow it, so I suggest to you, if you are going to sell you might as well sell with the company that is likely to get you the best result.