Christchurch leads cooling house market trend

Wigram Skies subdivision is one of many in western Christchurch.

Wigram Skies subdivision is one of many in western Christchurch.

More houses have resold at a loss in Christchurch than other centres in the aftermath of the region's building boom.

Stagnant prices means it is slightly easier for first-time buyers in Christchurch, while rents are reducing.

Data released from property analytics company CoreLogic said 7.9 per cent of sellers in Canterbury sold for less than they bought in the first three months of the year. That was a slight increase from 6.9 per cent in the previous quarter. Dunedin had the second highest proportion of resale losses (2.7 per cent), while in Auckland and Wellington it was 1.3 per cent.  

Housing affordability commentator Hugh Pavletich said Christchurch's slowing market was likely to be followed by Auckland where the housing bubble was shutting more people out of the market. 

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The sale losses more hit investors than owner-occupiers, who tended to hold onto property longer at six years on average. It was not clear if as-is-where-is property sales influenced the Christchurch figures. 

Pavletich said post-earthquake building, tighter bank loan-to-value ratios, less immigration and buyer resistance to unrealistic prices played a part.

Christchurch's market was cooling, but it still required nearly six times annual household income to buy a property while in Auckland it was 10 times, Pavletich said.

"It will affect other centres. The longer the bubble goes on, the worse it is when it deflates," Pavletich said.

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Canterbury sale volumes have fallen back close to 2011 levels.

Real estate agent Heather Chick said the market had cooled in the run up to mid-winter and many buyers were balking at asking prices.

There was still interest in as-is-where-is properties, but there was a risk if the city council or insurers required proof of repair in future, she said.

From a landlord's perspective Canterbury was over built, with tenants finally benefiting after rents surged post-quakes.

A city council report found a recent 5 per cent decrease in Christchurch rents with the median for a four bedroom house $500 a week. 

Rents increased more than 41 per cent between 2010 and 2015, and 78 per cent of renters could not afford to buy.

This showed a mismatch with the Ministry of Business Employment and Innovation's measures showing improvement for renters, the council report said.

Canterbury president of the Property Investors Federation, Stephen East, said he was unaware of a surge in loss-making house sales by investors and he questioned the size of the CoreLogic survey sample.

"But there's a housing over supply. Look at all the building to the west and north of Christchurch. Who is going to buy and live in them? It's flowing through to falling rents," East said.

The CoreLogic report for the first three months of 2017 revealed 96.3 per cent of all homes re-sold in New Zealand were for a gross profit compared with their previous sale price.

Based on national median figures, owners pocketed a gain of $167,000 per sale. The report found stand-alone houses were more likely to deliver profits than apartments.

CoreLogic head of research Nick Goodall said the picture was uneven at a regional level.

"Some regions as well as apartment owners and property investors are more likely to face a loss," Goodall said.


 - Stuff


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