Christchurch house buyers 'expect too much'

Last updated 05:00 01/03/2013

Relevant offers

Your Property

House sales stats Property market on pause for election Call to increase housing subsidies The best time to sell your home is... Higher rents, but better value tipped Investors' incomes depend on city Overhauling a kitchen on a tight budget Froth and bubble in property market Having no fixed abode no barrier to casting a vote Christchurch property market quietens

Potential property buyers may need to lower their expectations and move to further-away suburbs if they want to get a home. Anna Turner reports on what property experts are calling the "housing expectation crisis".

Want to buy a house in Christchurch? Well, according to experts, you may need to lower your expectations and be a little bit less picky.

The Press recently conducted its own investigation into the housing situation, finding little evidence of a city-wide housing crisis.

House prices were up, but the figures did not appear to be dissimilar to the rest of New Zealand.

See our interactive graphic on house price trends across Christchurch, and within each suburb.

The numbers of houses being sold across the city were similar to pre-earthquake levels, although the houses were selling more quickly.

Instead, the city is experiencing an "expectation crisis", property experts say.

Independent Property Managers Association president Martin Evans said the market was tougher because of a reduced housing stock, and many people needed to lower their expectations.

"With 8000 houses lost in the quakes people do need to look a bit harder to find something in their price range. There is more competition and prices are higher but there are houses are out there. They expect too much."

Evans believed first-time buyers needed to be more realistic.

"People say 'How is someone on a $40,000 income supposed to buy a house?' Well, often they're going for a four-bedroom, two-bathroom place with all the bells and whistles when they need to be going for a two-bedroom state house and work their way up the ladder."

New Zealand Property Investors Federation (NZPIF) president Andrew King said many first-home buyers wanted a large house, close to amenities, with a large section, but were willing to pay only the price of a small house, further from amenities with a small section.

"Because of this, the NZPIF believe a significant number of first-home buyers have a housing expectation problem rather than a housing affordability problem."

A study by Massey University in September 2012 showed home affordability in Canterbury and Westland had improved 2.3 per cent, King said.

People often prioritised other things over saving for a home deposit, creating a "housing priority dilemma", King said.

He believed measuring affordability by the ratio of income to house value was "crude".

Ad Feedback

"It takes no account of mortgage interest rates. Proponents of this ratio say that housing costs above three times annual income is unaffordable, but this is nonsense.

"If you save your annual income as a deposit and take advantage of the KiwiSaver homebuyers grant, then a home valued at five times your income can be purchased with a deposit greater than 20 per cent, which should make it affordable."

People might have to move further away from the city's most desirable suburbs if they want to get a home.

Median house prices in the eastern suburbs, the northern seaside suburbs and the southern inner city had all decreased since the earthquakes.

REINZ figures show median house prices dropped $45,000, or 17.5 per cent, in Aranui, Bexley, Bromley, Linwood between January 2010 and January 2013.

There were similar drops in other suburbs - a 24.3 per cent decrease in New Brighton and North Beach and a 27.5 per cent decrease in Sydenham and Waltham.

REINZ Canterbury director Tony McPherson said the north and west of the city were under the most pressure.

"Some areas are more desirable than others and there's more competition there. It is going to be a tight market for the next three or four years."

One Harcourts agent believed properties for sale in suburbs such as St Albans, Merivale, Avonhead and Redwood were in short supply.

"If you want a nice, four-bedroom family home in St Albans then I would say there is a crisis. There just aren't enough decent properties and it's not like they can get any more land in there," he said.

"If they're willing to go for a two-bedroom unit or they're willing to go further out into the suburbs then there isn't so much of a crisis."

Christchurch couple Daniel Phillips and Jessica Roberts, both 21, have been looking at buying their first home and said they were finding the market expensive.

However, they did not want to compromise on location.

"We are mainly looking at central locations.

"We don't want to live far out and there isn't that much in the areas we want to live in," Phillips said.

"We should look further out but I don't really want to live there."

A homeowner spoken to by The Press was looking to buy a four-bedroom home in the west. The woman already owned a three-bedroom property in Avondale, which she planned to rent out if she could find another home.

"We really had our hopes set on one recently and thought mid-$400,000s would be reasonable as it needed renovations. It recently went to auction and went for a little over $500,000."

Evans said this was a common complaint.

"Anecdotally, people go to an auction for a big place and their budget is $400,000 and it goes for $500,000. They walk away and tell everyone it's impossible to buy a house but they just need to look at a lower-end house in the $300,000 bracket."

SALES FIGURES

REINZ figures show median house prices dropped $45,000, or 17.5 per cent, in Aranui, Bexley, Bromley, and Linwood between January 2010 and January 2013.

Similar numbers are selling in these suburbs as before the earthquakes - 21 in January 2010, 19 in January this year - but in a slightly longer time - an average of 27 days in January 2010 but 44 days in January 2013.

There were similar drops in other suburbs - a 24.3 per cent decrease in New Brighton and North Beach and a 27.5 per cent decrease in Sydenham and Waltham.

- The Press

Comments

Special offers

Featured Promotions

Sponsored Content