The post-quake recovery is starting to settle in the past two years with growing incomes, stabilising rents and house prices improving housing affordability in Christchurch.
With 2013-14 seeing an influx of construction workers, household displacement from earthquake damaged homes and low housing stock all contributing to sharply rising rents and house prices.
In Christchurch, rents peaked in February 2015 at 49 percent above pre-earthquake levels and house prices at 33 percent above pre-earthquake levels in November 2014. However, since these highs, rents have fallen for nine consecutive months and house prices have plateaued. The number of houses for sale and rent have been steadily growing since the initial earthquake loss.
This is due to a combination of repaired and rebuilt homes coming to market and new homes being constructed in greenfield subdivisions. Further repairs and rebuilds will increase the number of liveable dwellings in the city, affecting house price and rent growth for some time to come.
At the same time as rents and prices have eased, incomes have been growing. Median household income in Canterbury grew by 11 percent in both 2013 and 2014, in large part due to construction activity and high employment.
On the residential trends for January 2016, REINZ Regional Director Jim Davis commented that, "First home buyers are becoming more active in the market as values settle and continued low interest rates increase their purchasing capacity.”
Affordability for renters, measured by median rent as a share of median household income, has improved in 2014-15. Any further rent decreases during 2016 will likely return affordability to pre-quake levels.
Rental affordability in Christchurch City is similar to that in Wellington and Hamilton. Affordability for first home buyers has improved in Christchurch. Canterbury Development Corporation estimates this through the time taken for a working couple aged 30-34, saving 15 percent of gross income, to form a 20 percent deposit for a first quartile house.
For Christchurch, it is estimated to take 5.05 years, down from 5.5 in 2014. If prices remain flat for a further 2-3 years then affordability should return to pre-quake levels of 4.5 years.
Source: CDC, REINZ