A continuing flow of insurance money, strong local interest which is being supplemented by population growth and overseas purchasers are combining to drive value growth within the Canterbury region’ s lifestyle property market.
Sales statistics released by the Real Estate Institute of New Zealand show that, while there is a fair degree of volatility on a quarterly basis, the trend has been strongly up over the last four years.
In the opening quarter of 2015 the median sales value was $641,250 compared with $630,000 a year earlier. In the opening period of 2011 the figure stood at $467,500.
Levels of sales activity have remained stable over the last three years albeit below the levels which were prevalent prior to the Global Financial Crisis (GFC).
Sales activity fell sharply in 2008 and 2009 as the Country moved into recession. In early 2011 there was a strong rebound as demand lifted sharply due, primarily, to the fact that normal demand for lifestyle property was bolstered by three new categories of buyers.
1. ‘Redzoners’ - households moving from red zoned areas of the city.
2. People arriving in the area and working in earthquake recovery.
3. Business people whose companies are associated with earthquake recovery.
While the impact of the above has softened since the end of 2013, all three continue to influence the market and will do so for the short to medium term future.
Insurance money and population growth drive the market
The lifestyle market continues to be influenced by the impact of the region’s earthquakes. Insurance settlements are still being finalised with a proportion of this money flowing into lifestyle property, an influence which is likely to be apparent for some time yet.
Concerns that the earthquake activity may have resulted in a significant population loss for the region have proved to be unfounded.
In practice there has been a redistribution of the population within the region with the, Selwyn and Waimakariri Districts, which house a vast majority of the region’s lifestyle property, both showing population growth between the census of 2006 and 2013.
Population growth within the region has received further impetus over the last 12 months from migration. In the year to April net migration to New Zealand reached a new record level of 56,800. The Canterbury region is the second largest beneficiary of this inflow recording a net gain of 6,200 over the 12 month period to April.
Interest in lifestyle property from recent migrants is strong, particularly for properties of between one and ten hectares. It appears that the appeal of living in a peaceful rural setting with plenty of space is as popular with overseas buyers as it is with locals.
In both Waimakariri and Selwyn Districts sales activity is greatest in the $600,000 - $800,000 value bracket. In Waimakariri this bracket has accounted for 38 percent of sales over the last year, while in Selwyn it is 37 percent.
The main difference in pricing structure between the two Districts is that in
Waimakariri the second largest bracket is the $400,000 to $600,000 bracket, accounting for 28 percent of sales, while in Selwyn it is the $800,000 to $1,000,000 bracket, in which 25 percent of sales fall.
The ongoing demand for lifestyle property has engendered a supply response, with vendors sub-dividing their properties into smaller allotments. Unimproved, or bare land, lifestyle property accounts for approximately 28 percent of the market within the Selwyn and Waimakariri districts.
In Waimakariri where vacant land accounts for 27 percent of sales the median sales value is $290,000 and the median lot size is four hectares. In Selwyn 29 percent of sales are of vacant land commanding a median value of $388,000 with the median land measurement also being four hectares.
Proximity to city big draw
As is generally the case around the Country, lifestyle suburbs located within proximity to major urban areas, providing employment opportunities, tend to attract the highest volumes of sales activity.
This is certainly the case in Canterbury as illustrated within the table below.
In the case of Selwyn’s six most popular lifestyle suburbs, all but Darfied are located within 40 kilometres of the Christchurch CBD. In Waimakariri all six are within 50 kilometres of the CBD with Swannanoa, Ohoka and Fernside all being within 35 kilometres.
Connectivity with Christchurch city will improve further over the next few years as the highway network is improved. The city’s motorway network falls within the roads of national significance designation and as such upgrades to the network have been prioritised.
Access to the north, west and south will be improved through various schemes, primarily:
- The Northern Arterial
- Western Belfast Bypass
- Southern Motorway
With a majority of the current drivers of the regional lifestyle market likely to remain in play over the course of the next 12 months, we foresee continued high demand for well located lifestyle property and mild upward pressure on values.
View the full Marketbeat report here or for further comment on the latest Canterbury lifestyle real estate market data and statistical research, contact Bayleys Canterbury director Bill Whalan. Telephone 0275 90 90 95