Christchurch Housing Market - Post Earthquake
Christchurch City has come a long way since the earthquake devastated the homes of many. What was once one of the most stable secure part of a family was now in ruins or damaged. Around three quarters of homes in the Canterbury region were damaged or condemned inhabitable. With many homes unliveable, the quake was followed by increasing rent and house prices.
While prices haven’t exceeded that of Auckland or Queenstown it has still increased by around 30% since the quakes. The reasons for such increase is similar to Queenstown’s Housing Crisis. It is in relation to the basic principle of demand and supply. The earthquake left many having to find a new place to live, therefore increasing demand for an undamaged house. The supply of housing was not there, in other words Christchurch did not have enough vacant homes for these people. Demand increased dramatically without warning, finding land and developing standards for earthquake proof housing lead to further delays. Those renting also felt the pressure. Renting could not be substituted for buying a house because this demand also outweighed supply. Some rental owners decided not to rebuild which only put more strain on available housing.
Does Christchurch have a housing crisis?
The Christchurch housing crisis! Not something that has been heard of since the 2011 February earthquake. Even if there was a crisis it would no doubt be shrouded by Auckland and Queenstown’s alarming housing predicament. So why haven’t we heard about a housing crisis in Christchurch? It’s simple, there isn’t one. Well not anymore. There was certainly a struggle for affordable homes and rent post-quake, given supply had lowered. But five years on and the Canterbury region has blossomed into a stable market for housing.
Christchurch is now known for leading the trend in smoothing house prices for 2017. The construction boom has allowed for many families to build homes fast. Buying a house has never been more accessible, with many vacant homes. The only housing crisis that could cause problems is oversupply. The building industry had gone mad post-quake because of the severe damage to infrastructure. Homes were destroyed and damaged. It was a no brainer that there was going to be construction work for years to come. The call was made that Christchurch needed labourers. They contributed to the fast-paced growth in housing that Christchurch needed. Now that supply has begun to outweigh demand, the questions begs whether there is the need for all these labourers. You might be surprised to find that many construction companies failed post-quake. It takes business skills to sustain cash flow and retain skilled workers. 160 construction companies lacked these skills and were forced to liquidate. Most of which were new businesses that wanted to avoid their liabilities.
You might be wondering how Christchurch could recover so fast without warning. Auckland had warnings of increasing house prices which is still a problem. If Christchurch can rebuild to oversupply in 5 years why can’t Queenstown or Auckland. What seems like forever that Auckland has had a housing problem, Christchurch has managed to pick itself up from a natural disaster and rebuild in less time that it took for Auckland to admit they had a problem. Christchurch had an advantage, the devastation caused by the earthquake created abnormal circumstances for Canterbury. Regulations were relaxed to make the construction process smoother and faster. They also had the added benefit of the Government pumping millions of dollars into the construction boom.
Landlords and property investors had the upper hand when supply was low. They were able to charge high rent and intact homes were in high demand. Now that supply has outweighed demand, investors are losing out while making it easier for first home buyers. CoreLogic, a property analytics company, believed around 8% of property sellers sold under the value they bought in the first 3 months of the year. A hard hit for investors. Auckland is expected to follow suit with property development increasing and house prices decreasing as a result of more supply. That is the downside of a housing price boom, it only lasts so long and eventually somebody misses out.
Fortunately, the Housing market in Christchurch is cooling off. Over the years the uncertain post-quake market has remained relatively flat. Supply has actually started to outweigh demand, new rentals and homes are sitting empty. Over supply happened because there was not enough control. Housing developers saw an opportunity but did not account for every other developer doing the same. A combination of low interest rates for Christchurch new home builds and insurance payouts led to many building new homes. Developers pre-existing homes they built to fill the void became redundant and further increased supply. As the city begins to take shape again, residents are returning. Having a surplus of housing also makes Christchurch an affordable place to live. But there are also drawbacks:
- Affordable homes.
- Cheap rent.
- Attractive for immigration.
- Opportunity for growth.
- Increased risk of housing market crashing.
- Job loss.
- Abandoned sub divisions.
- Land lords struggle to make profit.
Building and Renovating in Christchurch:
The loss of many homes has led to residents building new. Districts on the edge of Christchurch were inundated with developments, reshaping Christchurch. Selwyn, and the Waimakariri district played a big part in the rebuild. Unlike Queenstown, Christchurch is surrounded by flat land; allowing for substantial growth. When building or renovating in Christchurch, a local builder can make all the difference. A company that has stood the test of time will make your new build or renovation a breeze. There are many things to consider when building a new home especially in Christchurch, given recent natural disasters. There are stringent post-quake regulations that will give you piece of mind for future security of your home. Choose the right builder. Make sure that you have a Registered Master Builder working on any quake repairs or new builds. Careless EQC repairs are an avoidable stress that has unfortunately plagued so many Christchurch residents. Almost 6,000 homes have been repaired below standard, causing headaches for many. Choosing a trusted local builder is a no brainer, even if it is not the cheapest. You will be rewarded with high quality and no regrets. Take advantage of low interest rates and build your new home with JMI Construction.
As the city starts to take shape and businesses return, more apartments and homes are being built. Prices have risen by almost 1.5% in the inner suburbs and central city in February. Including Richmond, Phillipstown, Linwood and Addington. Central city experienced the highest increase in value at 2.6%. These figures reveal that people are coming back to the city. The cheapest suburbs to buy a home are Aranui and Phillipstown, with a median house price under $300,000. Bromley, Linwood, Waltham and New Brighton have a median house price under $350,000; based on February statistics.
Tips for making your home earthquake safe:
You can leave the building technicalities and earthquake proofing to your trusted builder. But there are some things that you can do to ensure that you are prepared if another earthquake were to occur:
Fix and Fasten Objects:
- Water Cylinder.
Have Access to Water:
- Have water bottles in storage.
- Quickly drain your water cylinder.
- Don’t drink water from taps.
Little things like fastening your book case to the wall can help to minimise damage but it is also a safety measure for your family. See more of these tips and how to implement them here.
We are yet to experience the side effects of the surplus in housing. If all goes well, the population in Christchurch will increase at a rate that will help to fill these vacant homes. A lot of the houses that were built are kit set homes. Basic homes that didn’t allow new home buyers to customise or add some personality. This was not an attractive prospect for many who were not only rebuilding their homes but their livelihoods. Building your new Christchurch home is a unique and rewarding experience. Taking a look around Central Christchurch, there are a lot of empty brand-new offices. Could we be witnessing another oversupply? The city centre is not back to the way it was, building offices is a step towards that. Even if it means they sit empty for months, it encourages businesses to return to the city. It needs to be monitored so that we don’t get oversupply, which would deter outside investment.
Be sure to get in contact with us and we will make your challenge our mission.