Christchurch residential property valuations riding a wave of optimism

The Christchurch residential property market continues to show stability relative to the other main centres, with its resilience through the downturn giving plenty of reason for optimism.

Victoria Murdoch, Southern Residential Valuation Manager at CBRE, says the market has now reached its cyclical low point, with factors including interest rate cuts, supply & demand dynamics and government policies all indicating future growth in house prices.

“We really are at the bottom of the market now, and with a second OCR cut expected before Christmas, we will see more optimism and activity in the market leading up to the end of the year.” 

Notably, Christchurch is well ahead of Auckland and Wellington in terms of average house price growth over the past year (to August 2024), recording a 4.5% increase. Christchurch also showed relative strength during the previous year, when all three main centres recorded falling values.

“In 2023, we were reporting decreases across the main centres, with Auckland and Wellington recording double-figure decreases. Christchurch was much more modest in its reduction and overall continues to be the most stable of the main centres,” she says.

There are a number of factors at play in Canterbury which influence this stability. Our strong primary industries, tech, professional services, healthcare and construction sectors contribute to a relatively secure employment environment and help provide an affluent buyer base.

Immigration is another positive market driver. While Auckland grapples with a significant drop in international immigration during and after the Covid period, Christchurch is experiencing a positive influence. 

“About 20% of new migrants to New Zealand are now coming directly to Christchurch, rather than starting out in Auckland and moving regionally if they encounter difficulties with finding work or housing affordability. This influx boosts our local economy and adds to the demand in our housing market.”

Regulatory changes expected to boost the market

Recent government policy changes are also playing a role in reinvigorating the market. The reduction in the bright-line test from 10 years to two gives investors a much shorter potential investment horizon, encouraging more speculative activity. This is expected to contribute increased transactional volumes and demand into the lower to mid value end of the market.

Additionally, the reintroduction of interest deductibility provides a significant tax break that increases the appeal of owning investment property, says Murdoch. 

“These changes are already filtering through to the market, with agents reporting increased enquiries and improved open home attendance in the lower price brackets.”

The upper value bracket of the Christchurch housing market ($2m and over) has remained robust through the downturn and this is also expected to continue, with many purchasers still prepared to buy if they find the right opportunity in this sector.

Among the high-value transactions that have been completed in the residential market recently are five sales on Scarborough Hill in Sumner. These properties changed hands at prices between $3m and $9.1m. All the sales were to existing Scarborough residents who are relocating within the suburb. Most of these transactions were concluded off market, to well-informed buyers.

The Christchurch residential property market is in a strong position for growth as we approach the end of 2024, Murdoch says.

“Several fundamentals are now in place in Christchurch that provide good cause for optimism. The main threat to the market’s recovery at this stage is a return of runaway inflation, however this is unlikely, given the global economic environment where other countries are also managing similar challenges.”

Average house prices, 12 months to August 2024:

• Auckland $1,391,023, a decrease of 0.5%
• Wellington $974,187, an increase of 2.0%
• Christchurch $760,927, an increase of 4.5%