Date Published: Friday 13th October, 2023
Considering selling your Christchurch home, but wondering if now is the right time? Here we explore the current market situation in Christchurch, and discuss the crucial factors that will influence your decision to sell now, or to hold off. Unlike what the media might tell you, we forecast market changes ahead and we believe it’s crucial to make well informed decisions before committing to selling your property.
Contrary to what the economists and the media are reporting, we still believe that the market will drop at least another 15 - 20%. While others were suggesting that the market would keep climbing, we have been saying the market will drop since its peak in late 2021 - early 2022. Our clients that sold with us during the peak and listened to our advice to not buy for 12-18 months, have done very well.
Past clients have seen both sides of the market, and have both benefited from taking our advice, and felt the unforgiving nature of the real estate market. In March of 2022, we assisted a client of ours in selling their West Melton property for a price that became a West Melton residential record. Our advice to them was to hold off on buying their next property for 12 to 18 months. They bought a home at around the same time as selling however, for $1,290,000 and sold that same house one year later in March 2023 for $1,020,000. We believe that this is a prime example of market volatility and goes to show how important the consideration of market position is, when it comes to buying and selling your property.
Before you believe the mainstream media, do some deeper personal research. When the media is controlled by the government, what’s the likelihood that they broadcast in detail negativity about the New Zealand economy just before the election?
ANZ’s fixed rate special at the moment
• 1 year at 7.09%
• 18 months at 7.04%
• 2 years at 6.97%
• 3 years at 6.69%
NZ House Prices vs Salary; The Past vs Today:
Table 1: Affordable real estate is three to four times the average household income. Now, it is 6.1 times the household income. This is in vast contrast to both 2008 and 2017, where the ratio of income/house price was a far closer percentage.
Table 1:
In July 2023, the median house price in Christchurch was $730,646, whilst the median household income was $119,000. This equates to over six times the average household income, a far cry from years even as recent as 2017. For real estate prices to return to equilibrium, either the average salary has to increase 2 fold, even 3 fold, or the median house price has to come back down by at least 15 - 20%. You don’t have to be a genius to figure out what’s going to happen.
There are two reasons why we are having a little upward spike in the market. 92% of homeowners are still happily sitting on below 6% mortgage interest rates. Furthermore, the upcoming election is squeezing the brakes on the market, due to the economic uncertainty that it causes. This means simply that fewer people are selling their properties. Basic economic supply and demand!
Table 2 below highlights the differences in the same $750,000 loan interest repayment over three recent periods; June 2021, June 2022 and today.
Table 2:
Now imagine what will happen next year, when the 92% of Kiwis currently sitting on interest rates well below 6%, have to fix their mortgages at 7%+. When the election comes to an end, the market will become more crowded, and you know what that means.
The short answer is yes, now is the right time to sell in the current Christchurch real estate Market. The market is on its way down and will be for some time, so the sooner that you are able to sell, the better. Naturally it is better to sell your home now, whilst the housing supply is low.
In regard to uncertainty about the election, it is best not to wait until it is over. We will see a far more crowded market post-election, where getting your home sold is a more difficult process. Don’t expect immediate changes post-election either, as we predict the market to fall another 15% - 20% regardless, into July 2024.
At Najib, we believe in the 3 Ps;
We understand that the state of the current Christchurch Real Estate Market is leading to many varying and confusing opinions on whether now is the right time to sell, but we are here to help. Please do not hesitate to get in touch with any questions you may have regarding the Christchurch real estate market, or with any general inquiries. We know what’s important.
Thinking about selling your property? Feel free to contact us here.