August 2022 Market Update

by Hamish Wilson on Wed Aug 2022
August 2022 Market Update

Find out why we agree with the critics that Christchurch has "got it right" and is the best place to live and invest...

Stand strong in the winter blues…

All roofs look fine until you have the wettest July on record, and then they still look fine, just wet and for a large amount - wet on both sides! It’s a mystery to me how and why a perfectly good roof all of a sudden decides it’s going to leak. This months theme is rain, rain and more rain.

The numbers, if you are interested, the last recorded high for the most rainfall in 24 hours was 199mm in 1978, this has now been surpassed by 268mm on 26 July 2022 and 1977 was the wettest July in Christchurch until 2022. With the average rainfall usually being 60mm per month, we have had around 400% more rain on average than July.

Christchurch has “got it right”

I’m not sure if I have become cynical or skeptical or maybe even both with some of what we’d normally call mainstream media reports about the property market. A part of me believes the commentary, that there is sponsored ‘wishful thinking’ from the Reserve bank and the Government or perhaps I’ve been watching too many conspiracy movies…

Despite what you read, it is not all doom and gloom. Sure, we have seen the markets turn in Wellington and Auckland but to be honest with you, they were at the point of being unsustainable. There is a limit to any market and that has been met in those areas.

The good thing for us is that Christchurch is being hailed as the one city in New Zealand that’s “got it right”, with some of the cheapest house prices and rents compared to all the other major cities and even some North Island provinces.

The country’s third largest city had a median weekly rent of $480 as of May this year, up 20% from $400 two years ago, which was the price it had been since 2014, according to the latest Ministry of Business, Innovation and Employment rental data. Canterbury also recorded a median house price in June of $690,000 and $700,000 in Christchurch, showing that prices are still much cheaper than other large New Zealand cities, despite being one of the few regions still recording month-on-month growth.

The shortage of rentals continues to push rents up, especially in provincial areas such as Gisborne - up to nearly Auckland prices. Christchurch remains the one city in New Zealand that had “got it right” because it had built enough housing stock after the city was rocked by the earthquake in February 2011.

The reason why Christchurch is stable is there’s enough property to meet the demand and it’s led to stable rents and stable house prices. The infrastructure is excellent. In regards to lifestyle and affordability, Christchurch just about has it all, other than a stadium (once that’s built!)…sorry I just had to get the stadium in there.

CoreLogic Chief Economist, Kelvin Davidson, said there isn’t a “flood” of people moving to Christchurch, but Christchurch appeared to have a better balance of supply and demand due to more favourable planning rules and a more proactive attitude to development which was keeping it affordable.  Kelvin says, “whether it’s owner-occupier or rented, the key point is both sides of the equation are looking in better control in Christchurch so you have to think there’s some kind of reasonable balance there. You’d be hard pressed to say there’s an under supply because especially around greater Christchurch there’s still a lot of development going on.”

Winter deals still available

We are still booking our spouting and heatpump specials. The spouting cleaning ranges for an average single storey property being $180 and $240 for a two storey. The heat pump service is $108.

What’s happening in the local market?

Following on from the last four months, we have seen an increase in supply again but only by nearly 100 properties. Trade Me has 919 properties listed for rent in Christchurch this week.

Interestingly, it has been another month of strong enquiry from landlords and tenants. The tenant enquiry rate is strong which is unusual for this time of the year. I guess this time next month we are technically out of winter, however those winter chills seem set to remain for a bit longer this year.

As you know, we don’t get involved in the sales market but keep a keen eye on it as part of a barometer for us as to what’s happening in the local market. With property sales slowing, vendors aren’t achieving the higher prices they were seven months ago and we are seeing some of these flow back into the rental pool. The property clock moves in mysterious ways, often holding off a sale, listing your property for rent instead thereby benefiting from a good rental return and waiting while the market sorts itself out, will be more lucrative in the long-term.

Inflationary pressures

At A1 our goal is to provide a service and knowledge level that is beyond competitive, like many other businesses, we are impacted by market changes such as price increases, staff costs and general inflationary pressures. With this in mind, we are currently conducting a review of our fees due to those increased costs. We want to be able carry on growing and delivering the services and updates that you expect from us.

As you know, this is the first time we have looked to increase pricing in many years. During that time, we have absorbed rising business costs to assist our customers, particularly through the difficulties faced over the last few years. If anything we will looking to make a change around the inspection costs as this is where we have seen significant cost increases.

As always, we do truly appreciate your business and the team and I are always just a phone call away. We are always available for a free chat and are happy to share our experience and knowledge wherever we can be helpful.

Hamish Wilson

Hamish Wilson

An active investor for over 25 years & qualified builder, property has always been a part of life. Hamish has sat on the committee of the Canterbury Property Investors Association including two years as President.