Average house sale asking prices hit record high in quake-hit Canterbury as unsold inventory in the region falls to nationwide low

The Earthquake Recovery Minister says the private market has the capacity to deal with the tight housing situation in Canterbury, as new figures show asking prices for homes in the region hit a new high in March and inventory levels fell.

The average asking price for houses listed for sale in quake-hit Canterbury rose to a new high in March of NZ$383,395, up 2% from houses listed in February and up 7% from March 2011, figures released by realestate.co.nz show.

And while the 1,532 new listings of houses for sale during the month was similar to that listed in February, the level of unsold inventory in the region fell during March to 20.9 weeks of equivalent sales, down 17% from February and down 60% from March 2011, according to realestate.co.nz's March Property Report. However, Brownlee questioned why the government would step in to a market that hasn’t yet hit the national average asking price.

National average asking prices hit a new high of NZ$429,865 during the month, up 1% from February and 3% from a year ago. Read Realestate.co.nz's views on the national situation in Gareth Vaughan's article here.

Tight

Many Christchurch home-owners whose properties were ruined in the earthquakes that have hit the city since September 2010 are reporting rising prices of the stock of houses available for them to buy, and that prices are rising beyond what they can afford from the assistance they have received from the government.

In June last year, the government offered to buy-out red-zone homeowners at 2007 values, while giving them another option that a homeowner could choose to receive a government payout for the value of their land, while they continued to deal with their own insurance company for a payout on their home. There are currently about 7,000 red-zoned properties in Christchurch.

The head of the Canterbury Earthquake Recovery Authority (CERA) told Parliament's Finance and Expenditure Committee in March that CERA envisaged 26,000 new sections would be coming onto the Christchurch market by next year.

'The market will take care of it'

The government has come under fire from Opposition Parties who say it has not done enough to support the housing market in Canterbury as prices rise due to a shortage of available housing, and as rents rise in tandem.

Speaking to media in Parliament Buildings on Tuesday morning, Minister Gerry Brownlee, who was tasked by Prime Minister John Key with overseeing the government's operations in quake-hit Canterbury, said the government believed the private sector had the capacity to deal with the market pressures.

There were houses available for sale in Canterbury, Brownlee said, while land and building packages were being offered by a number of companies in the city.

“We think at this stage, it’s best that the private market takes care of it,” he said.

When asked about rising asking prices for houses listed for sale in Canterbury, Brownlee noted this was still below the national average asking price.

“You’re asking the taxpayer to step in to a market that hasn’t yet hit the national average?” he said.

“It’s not Canterbury’s where the government assistance will be coming from. I think it’s a difficult situation for people there – no question. But I think the capacity does exist for the market to sort it out,” Brownlee said.

Govt comfortable with situation

The figures from realestate.co.nz follow comments from Housing Minister Phil Heatley in Parliament last week indicating the government was content with the current actions it had taken regarding the housing situation in Christchurch.

The government was "not considering...at this time" regulating the Christchurch rental market, and it was boosting the supply of temporary homes available in Christchurch.

“The Minister responsible for earthquake recovery [Gerry Brownlee] announced last week that we’re providing more temporary accommodation in Christchurch to provide for supply," Heatley said in response to questions from New Zealand First MP Denis O'Rourke in Question Time last week.

“Clearly we’ve got new developments coming on stream, and we believe that supply will help meet demand and therefore drive down rental and house prices. That’s what our primary objective is,” Heatley said.

"We’re buying people out of properties in the red-zone where they can take that check and buy elsewhere. I’m assured by the Minister of Earthquake Recovery (Gerry Brownlee) that when he reads the newspaper, there are sections and house packages available," he said.

“We also have the temporary housing villages, Mr Speaker. We have the accommodation supplement, those seeking rental in Housing New Zealand properties have the Income-related rents supplement.

“Yes, we’re open minded to any other interventions, but at this stage Mr Speaker, we believe that our progress so far is sufficient. If we need to ramp up, we will,” Heatley said.

Tight in Canty, sellers have the power

Realestate.co.nz CEO Alistair Helm said that while the trend over the first 2 months of the new year had been to see some balance of inventory-to-demand, "the current picture as represented in the chart below shows a [national] market facing tightness in availability of listings with 7 of the 19 regions (dark blue) so low in inventory that they are very clearly providing sellers with the ultimate power."

"Coupled with these 7 regions, are a further 6 (light blue) where inventories are below long term average and show strong signs of a sellers’ market," Helm said.

See inventory levels around the country in the table below:

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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30 Comments

Well there you have it.
Olly Newland was right all along.
You whingers were wrong all along.
And where are the gloomsters now?

Totally humbled.

You seem to have suffered from a left wing brain failure here Hugh. What the article is saying is that property is quite expensive in the present market conditions. I really don't know why the realestate institute is so keen on this message, because logically that makes property a bad speculative investment, not a good investment (which either has scope for price appreciation, or is not likely to crash when you want to sell out).
I guess they are pandering to anybody who genuinely believes there is always a bigger sucker to take your mistakes off your hands (and that they are not the bigger sucker). The style of the analysis certainly says we have a great deal of confidence in the price level, but logically its a terrible reason to buy. If you are genuinely speculating on property you want a lot of room for price appreciation, because that is your profit.
Yes, I am saying its style over substance and that this is obvious to anybody with a functioning left brain. Its also exactly the message I would expect from the realestate institute, buy buy buy, regardless of the market conditions.
 

"because that is your profit." and a decent % for the risk...
Agree....I think its crazy to buy into a undertaking when there is little signs it can go significantly higher but large signs it could drop a long, long way.....You have bought an illiquid asset with other ppls money that when the drop starts no one will be buying....at some stage the bank comes knocking and takes everything to recover their losses....
regards

This is an extraordinary situation, the place has had tens of thousands of terrified people fleeing the ongoing aftershocks, yet property prices have been attached to a skyhook?
Hugh P could hardly have got a better proof of the case he has been arguing for so long.
I suggest he is absolutely right that ChCh is absolutely finished as a viable urban economy, if it remains ridiculously "unaffordable" in perpetuity. It is not as if we don't have examples of what this lunacy does to an urban economy in the long term - look at the disaster rust belt cities in Britain, for example - Detroit with unaffordable land and housing - and poky, miserable, dilapidated, grimy stuff at that - Detroit at least has lots of green space and leafy large-lot suburbs, and it has businesses moving in to take advantage of the low land prices.
 

Reality is coming.
 
The International Monetary Fund has singled out the high value of the New Zealand dollar for comment in its annual stocktake of the economy.
The IMF also says the Government does not need to cut spending any further than it already plans to.
The agency, which is based in Washington DC, says a continuation of the dollar at current levels means New Zealand's already high debt will continue to accumulate at an unsustainable rate.
And it says the kiwi could be overvalued by as much as 20%.
The IMF says the Government's plans to cut its own deficit will help take pressure off the dollar.
But the fund says if it cuts spending more deeply than already signalled, it risks knocking the wind out of the recovery.
Listen to more on Morning Report

Thanks OMG...this is in fact the second time in three years the IMF has singled out the N.Z. dollar for special comment.
While it has high value as a pairing for speculators/speculation...this Administration ..particularly this Administration ..will do little about it.....will claim they can do little about it.....and continue with the "wait and see policies".
The IMF are now  and were jawboning a shortwhile back a rethink in terms of intervention by means of unused tools available....that is literally a 180 in terms of straightline IMF thinking.
 Conclusions reached from the E.U. situation regarding the speculative economy vs the productive economy have been a major factor in the rethink I am sure.
 That said, they always stop short of recommending any interferance or disuasion of speculation that has reached unsustainable proportion.
 As in the case of Spain...they watched the train-wreck unfold with analytical commentary as opposed to ringing the bells to clear the tracks. 

When the dollar does eventually go sub, look out NZ. It will ......cause it must

I said a while back Chch was unlikely to ever recover and might even be finished.  It ranks as one of the biggest insurance claims ever, something like no3?....that will make insurance either un-obtainable or prohibitive in the future.  Yet I seem to recall Hugh P didnt think that was a risk for businesses. Then we find out that these eqs could go on for 5 years.......if that isnt the death knell/toll bell for chch businesses and hence employment and house prices I dont know what is.....Sur eits understandable there is a short term price spike.....you cant make houses over-night even if you had land and services to hand.
Detroit looks somewhat dead and getting worse by the day...funny how you can see things one way and I another. But this will prove to be a good example of who is right, wont it....by your method detroit should boom.....I think we will see it stay as is at best.....quietly rusting away....
regards
 
 

I thought there was supposed to be a building boom going on down there, Hugh? You know, tens of thousands of new homes being built? Not so??

Indeed a very good read:
Note this point:
"......Of those who bought houses over the past two years about 2 in every 7 are now under water (negative equity) thanks to falling prices and high loan- to- value mortgages......."
The victims of fiscal child abuse - and this is a very big iceberg with the tip only just showing.
I weep for young friends of my family who would not listen to the contrarians. Hard for them, when everybody including their own parents is earbashing them every week to "get on board the home ownership train before prices get even more unaffordable".
 

Olly would not say that "piling in" was a good idea at all.
Quite the contrary,
He would say that using prudent and well researched investment techniques and obtaining independent professional advice will more assuredly bring its own true reward.
Unfortunately there has been a recent rise of another lot of "get-rich-quick" false prophets who offer "free advice" in order to  flog off their own or others rubbishy property and harvest secret back-handers at the same time.
Nothing is "free" as everyone knows. 
Tragically the greedy and naive fall for this gobbledygook because they fervently believe that instant riches are easily earned.
If the market continues to improve at the same rate as now the chances of another ponzi "BlueChip" type disaster is inevitable. 
 
 
 

Interestingly, the Productivity Commission inquiry into Housing Affordability, suggests that the very low "institutional" involvement in housing investment, is because institutions do sufficient due process, wheras mom and pop "investors" just believe the myths they heard over the coffee and the barbie.

Yes...I wonder where Nicholas Arrand is these days. 
He was so busy pontificating on something he either knows nothing about or, and this is more likely, something he holds passionate views about, views that blind him to the obvious, that he has got the story about the housing market hopelessly wrong.
 
Bit like Bernard H. Bernard...how wrong have you been?
And every day you just get wronger!
Is that a word? Never mind...it sums up Bernard's ideas.
Gee...I guess owning a house and leasing it out is actually worth something to the economy after all Bernard.

Or maybe like me, he's decided that such ppl as yourself will only learn by hard experience....we have pointed out the risks and large impacts, but you believe you are OK.
What else is there to add......
regards

Of course there are risks - but while you sit on your hands fretting - people made 20%+ gains in Auckland last year.
And we all see what is happening this year.
SK

It's only a gain if you sell.

How simplistic.
As most financially literate people would know - equity in assets can be used in many ways.

ppl in 1929 thought that as well.....leverage is fine until someone calls (a bit of) it in.....
regards

Steven,
I agree totally with the argument you are making here.
Even Adam Smith in his famous 1776 book, had all this stuff right.
Inflated housing prices is no more "wealth increase" than inflated clothing prices - housing is just a much more durable necessity.
No gains are made, other than at the expense of someone else; no new wealth is created.
And debt is not wealth........regardless of how unearned the "collateral" was.
This is like a trap for a decadent civilisation - whom the gods would destroy........etc

In the last 4 years how were the gains? take inflation into account how did they do?  So sure in some suburbs there were "interesting" gains....are those typical NZers? , renters? or typical PIs? not from what I can see, the few PIs i know all posted losses, but lciamed those via PAYE ....so sure some lucky or careful targetting saw paper gains...and where is the actual profit? you have not sold yet, so its not realised.
NB I dont fret, Im in little debt and cash and prefectly happy for myself...what Im not happy about is my Govn may end up bailing out the banks who lent to the likes of you...if the losses were only yours Im all for allowing you to do what you will, but that isnt the case.
take Ireland as an example...some ppl were "making" $ until it all turned pear shaped....then ppl like me got left with the bill.
regards
 
 
 

steven...what is this "learn by hard experience" stuff?
I've been invested, continuously, in property for over 23 years now.
All the things you blather on about as being the ruin of property investors New Zealand wide, I have seen before. Nothing is new...believe me! And it's the same for the others on this site who are long-time investors.
You have "pointed out the risks and large impacts" have you?
Ha Ha, your pompous attitude is funny. 
Mind you I love it when you rail against property...some easily convinced person might be believing you and therefore not enter the market...leaving me with less competition for the tenants.
Thanks steven for your best efforts on my behalf.

Alas they have all departed - and I am left feeling like this site has lost some of the interest of yesteryear.
SK.

Im sure you can be a succesful troll elsewhere.
regards

a countries wealth built on rising house prices thats great for the future.
take away rent subsidies and wfft and rents and house prices will fall to a more affordable level

Would you stop spooking the market, my house will be listed in few days..
In a few weeks I will know who's right.. Oily or BH's worshipers.
 
 

Why / how will you know?  right now there is no imminent price collapse in the offing like 25% or something in a year...its coming IMHO....but I dont think the start is for say 1 or 2 years......but I think so within 5...and it will take 3 to 6 years to drop to the bottom....
So really all you can say is some day in the future when it blows, thank god I sold...or it never happened so I lost profit...
So hopefully you have mutliple internet capable bank accounts with differring banks so you can shift the money fast?  If they all start to go of course just how you get $400k home in a suitcase is almost 3 stooges territory.
regards

Yup, sellers the market is booming!
 
In our "hotest" (dark blue) RE markets of Auckland and Chch you need only wait a bit over 5 months on average to sell your place.  Also really "hot" (dark blue) is the Central Otago market where you need only suffer the inconvenience of open homes every weekend for a mere one and a half years before selling.  Less "hot" but still erring on the side of good selling conditions (light blue) is Coromandel where you'll be moving on in life with lightening speed after an average of 3.8 years of being a seller in that market.
 
Is it any wonder why folks are reluctant to list?
 
 
 
    

The Christchurch situation is both much better and much worse than can be discerned from the outside.
Firstly, the show isn't 'finished'.  There are 7K houses red-zoned, and perhaps a futher 20K with significant damage.  But that's out of 160K households, or closer to 200K if the greater Canterbury area (Amberley to Ashburton) is taken as a base.  Do the numbers and stop holding yer breath, doomsters.
Secondly, despite the City Councils antics, general incompetence and unrelenting focus on the CBD, life goes on.  What was in the CBD and can survive elsewhere, has.  The rest isn't missed in economic terms.  No-one has starved, run out of gas, or has been struck down by nasty epidemics or the communicable diseases common to areas of bad habits and worse infrastructure.
Thirdly, the city has a varied economic mix.  There's agriculture, education, a high-tech cluster, manufacturing and a thriving service economy.  Nothing like Mo'town, folks...
Lastly, houses in desirable, undamaged areas (say, 60% of the city) are lasting literally just days on the market.   Now this does not gainsay the overall housing-unaffordability point which HughP makes so eloquently.  But under these conditions of quick, often private sales, the traditional RE information is frankly well off the pace.
As to the unaffordability argument, that's where the 'much worse' aspect gets going.  Sections are still crazy prices, the CCC is still placing unrealistic development contribution demands on developers, the consenting process for new subdivisions is still an adversarial grind, a standing joke and a carrying-costs wet dream for the bankers.
Hey ho...

Here's a thought to start the day...
"Christchurch ratepayers .... to help fund the city's earthquake recovery and the rebuild of quake-hit facilities.
The Christchurch City Council this afternoon ...recommended 7.47 rates rise." stuff.co
Much of the extra cost goes in wages to workers fixing stuff up.. a fat chunk of the wages go direct to govt in paye....so in effect .. a fat chunk of the rates they pay is going to govt in paye and the poor fools are paying gst on that fat chunk...
Talking of fat chunks....what's Gerry been up to?

In otherword's "either way YOU will pay" people of CHCH (and beyond ofcourse )