The thriving Canterbury economy with average incomes growing paired with stabilizing rents and house prices is helping improve housing affordability in Christchurch.
The average time for a working age couple to save for a house deposit (saving 15% of gross income for a 20% deposit) has decreased to 5 years from 5.5 years in 2014 but still not as low as the pre-quake timeframe of 4.5 years.
Bayleys Canterbury residential manager Rich Norris said, “For many first-time buyers incomes are growing and the average time to save a deposit is decreasing. There’s an increase in people having an opportunity to jump on the property ladder in the city.”
Following the earthquakes, both rents and house prices increased sharply and we saw a significant decline in affordability. This was largely due to the influx of construction workers, the large number of households displaced due to damaged housing and the loss of housing stock.
In Christchurch, rents rose 49 percent and peaked in February 2015 while house prices plateaued at 33 percent above pre-earthquake levels in November 2014. However, since these highs, rents have fallen for eleven consecutive months on a year by year comparison and house prices have stabilised. 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 and three percent in 2015, in large part due to construction activity and high employment.
“We have seen some downward movement in rental income recently,” said Norris, “But there’s no slowdown in demand for investment residential properties. Those looking for places to put extra income find that cash investments offer very low returns. However, with low borrowing costs available many are making the leap into property investment as an opportunity for long-term capital gain.”
Christchurch house prices (averaging 445,000 in March 216) show an annual growth of 2.6%, with annual volume growth of 10.6%. Canterbury house prices (averaging $425,000) show an annual growth of 2.9% with annual volume growth of 9.6%. The median sale price for New Zealand grew 6.6 percent on average in the past year, up to $495,000. A heated housing market in Auckland continues to drive the national average upwards.