High rent, low interest - time to buy
High rents and low interest rates should trump rising Canterbury house prices, the Real Estate Institute says.
The region's 12 per cent annual increase was more than double the national average and 4 per cent higher than Auckland's.
Last week, Reserve Bank governor Graeme Wheeler said the bank was keeping a close eye on New Zealand's "booming" housing market and its impact on inflation, while Canterbury economist Robin Clements said the market would become tougher for those paying off a mortgage when interest rates rose from historic lows.
Real Estate Institute of New Zealand spokesman and Ray White agent Tony McPherson said yesterday that higher prices were unlikely to worry buyers facing high rent rises who were still able to borrow at low interest rates.
Earthquakes and the lack of new housing stock meant demand outstripped supply.
"First-home buyers are being motivated by record low interest rates coupled with record high rentals, so what they're paying out in rent can get them a pretty substantial mortgage at the moment," he said.
"It's about getting on to the property ladder, so some may have to compromise on house size, age of house or location just to get started."
Christchurch decorator Jamie Brill, who bought his first home in Redwood before Christmas, said he was surprised by the standard of houses in his price range.
"I didn't think I was going to get anything for the money I wanted to spend in the area I was looking at. I was very lucky to get my place for what I got it for,'' he said.
"The places that would have been $250,000 a year ago are now like $330,000."
He was not deterred by higher prices because his business was thriving through the earthquake-repair programme.
Nicki Rainey sold her Wigram home in just seven days last month, which left her questioning the asking price and sales strategy.
"It surprised us a little bit that we basically got what we wanted for it straight away,'' she said, ''but then we started thinking, ‘Should we have gone for more or was that what it was worth and we just did it well?'
"I think potentially we should have changed how we sold it and gone deadline [treaty] or auction.
''In hindsight we probably would have got potentially anywhere up to $10,000 to $20,000 more if we did it that way."
Rainey said the speed of the sale had been "pretty damn quick".
About 13 people attended the sole open home and close to 1000 viewed the house on Trade Me.
She estimated her new home, which was still under construction, had already increased in value by $60,000.
- © Fairfax NZ News
Should it be compulsory for sellers to declare EQC/insurance payouts?Related story: Problems in 'as-is' market