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Christchurch Market Update October 2021

Sep Market Comment

The release of the real estate industry sales data for September has brought with it a few anomalies to the fore. The data essentially shows that the country – and particularly Auckland – figures have all been affected by the Covid restrictions and lockdown levels and, because Auckland is such a big part of the New Zealand market, it creates the anomaly.  

To put it all into perspective, I expect that the media will trumpet that the national median sale price dropped over September and they will hope this heralds a slow down of the overheated property market. 

To understand what’s happening, a person needs to first understand what the median price figure represents.  The median price figure is derived from placing every sale price from across New Zealand for the month in descending numerical value order, and the reported median sale price is the figure right smack in the middle.  Over the month of September, Auckland has largely experienced the lockdown so sales volumes in our largest market (that also has the highest price values) have slowed for the month. 

With a lot fewer sales happening at high Auckland prices, it is then understandable that the national median sale price will be lower over September, as there are far fewer high value sales at the top.   But once Auckland is back to ‘business as usual’, I would expect the national median to sky-rocket again.  

When the Auckland anomaly is taken out of the equation, we see that the escalating property prices have not slowed down elsewhere. When looking at the data, you will realise that property values have still by-and-large increased almost everywhere, while sales volumes have reduced…pretty much because of the huge shortage of property available to sell and the unrelenting demand.

Here in Christchurch, we could see the same trend with our own Harcourts data. Despite the first week or so of September being locked down, once we were able to transact business effectively again at Level 2, it was gratifying to see that Harcourts brought an additional 633 properties to the market during September. This number exceeded the number listed in September last year by just over 7.5%. 

While that might to some be a hopeful sign that stock levels are about to increase or perhaps demand is slowing, reality tells me it is just a sign of the dam effect. By that, I mean as soon as our consultants were allowed by law, they were able to go out and list the properties that had been prevented from coming to the market by the lockdown. 

Looking at the new listings, close to 55% of those new listings were placed in auction programmes by the owners. So, as we roll through October, all those listings are now coming into the marketplace – once they have been photographed and the necessary documentation gathered and available for sale.  

Harcourts’ own sales data for September shows that our inhouse sales volume was slightly down in comparison to September last year by just on 13%.  This isn’t surprising, as setting up auction programmes for any listing typically adds a week or two to the timeline from listing until it goes on sale. So, with more than 50% of our stock listed as an auction, we could reasonably expect the actual sales result to lag a bit following any lockdown.  Yet despite this we achieved a near record market share within Christchurch, showing that the public are appreciating the strength and advantage the Harcourts system offers them. 

The worrying trend for buyers, however, is that there is no sign of any slowing down of the inevitable rise in property values based on what Harcourts’ sales figures show from across our city. A particular trend to note has been a huge surge of interest from buyers and investors in land again.  The implementation of the Government’s new interest deductibility policies came into effect at the beginning of October and, with the release of information and detail around the policy, we would expect to see waves in the investment sector going forward.

It has been noticeable that leading up to the release of the finer detail, the savvy investors have already turned their attention to property that offers land along with development options. With the release of detail now and the availability of interest deductibility on new builds, I think it is reasonable to assume we will see further interest and pressure on land values going forward. 

The flow-on effect of this will likely be further delays and price increases in the supply chain for the building and housing industries, as even more development pressure is applied.  Having said that, the ultimate good that comes from all the new builds and houses coming into the national housing stock will benefit everyone for years.

Locally, the industry market trend reflects what has happened within our own Harcourts’ figures but just not as strongly.  The newly released REINZ median sale price for Christchurch has grown to a staggering $670,000 over the 556 recorded sales.  The ‘days on market’ moved out a bit to 34 days but that is purely a reflection of the lockdown week in early September, and the fact that Harcourts as the dominant player in the local market gets its auction programmes back up and running at full steam again. 

But as always, the devil is in the detail. While the total industry sales had a median sales value of $670,000, our own Harcourts’ median was $712,500.

If you look at average sale price for all sales in Christchurch city, it was $765,227; while the Harcourts’ average sale price was $849,263.  When you factor in that Harcourts sold well over 50% of the market in September, then the Harcourts difference starts to become apparent.

You get one chance to sell, and let’s be honest – every property is likely to sell now. You just need to decide if you want the best sale price possible using the Harcourts system and advantage…or not.  Most of the other sellers in Christchurch are choosing Harcourts; perhaps you should consider it as well.

 

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