Tale of two cities after the quakes
Confidence in the Wellington and Christchurch property markets after the Kaikoura earthquake has moved in opposite directions, according to a Colliers International survey.
While Wellington property was more damaged in the shaking, Christchurch took a far bigger hit on investor confidence.
A quarterly survey conducted by Colliers shows the damage to buildings and infrastructure in Wellington was not deterring investors, but they have become more wary of putting money into Christchurch property.
The survey tracks sentiment in the commercial and residential property markets, with a zero score meaning respondents were evenly split on whether the median price would go up or down over the next year.
It was based on the responses from about 2300 people in the commercial property sector and nearly 15,000 in residential real estate.
In Wellington, overall confidence grew to 29 per cent, up 7 per cent from last quarter, despite the reduction in available office space, according to the survey.
Office-sector optimism was at an all-time high, at 39 per cent.
Colliers’ Wellington managing director, Richard Findlay, said A-grade office vacancy rates were at an all-time low due to the November earthquake.
Findlay said there were also more buyers looking to upgrade their homes because of the high business confidence.
‘‘The Wellington residential investment market is strong, with large increases in rentals, which is having a positive influence in prices,’’ Findlay said.
He said the record-high numbers of students attending Wellington’s tertiary education institutions was also contributing to rising prices, and high rental demand.
But it was the opposite story in Christchurch.
Investor confidence in the city’s commercial market dropped to its lowest point since the first quarter of 2011 due to the February earthquake that year.
Investor confidence in the Christchurch commercial property sector was minus 2 per cent, a 15 percentage-point drop from last quarter, and the residential market dropped 14 points to zero.
Colliers’ national director, Alan McMahon, said this suggested there was an equilibrium between demand and supply in Christchurch.
Queenstown had the highest level of investor confidence, both for residential, at 74 per cent, and commercial, at 67 per cent. Other high-scoring areas were Hamilton, Tauranga and Mt Maunganui, Auckland, and Hamilton.
McMahon said the scores correlated with areas of strong population growth.
‘‘The exception is Wellington, which is showing huge confidence despite a relatively slow-growing population,’’ he said.
‘‘Our view is that Wellington has been too cheap for too long and is now playing catch-up.’’
Overall net confidence in the New Zealand commercial property market was positive at 24 per cent, but down from 32 per cent in the fourth quarter of 2016.