Average city home value tops $800k

In January 2020, the average house in Christchurch was worth just more than $510,000. Two years on, it has jumped more than 50% to hit a record of $800,000.

QV statistics released yesterday show the average Christchurch home increased in value by 0.5% in April to reach $801,614, but expert commentators have warned prices are likely to dip as the housing market cools.

‘‘I suspect we will see it drop, sooner rather than later,’’ property consultant Olivia Brownie said.

There were ‘‘clear signs’’ the city’s property market had slowed because of a rise in interest rates. ‘‘A new equilibrium will be found sooner than some predict.’’

Overall, the average Christchurch house value has increased by 56% since January 2020, when the average was $510,575 – a rise of nearly $300,000.

CoreLogic chief property economist Kelvin Davidson said it was ‘‘fair to say’’ the city’s property market was cooling and would continue to do so, once factors like higher mortgage rates and reduced credit supply began to bite.

Data showed the number of new listings was about normal for this time of year, but buyers had more choice because sales were taking longer, he said.

‘‘In other words, there isn’t really much evidence of a rush to sell.’’

Investors were also being careful to avoid the Brightline test – a tax on financial gains people make when they buy and sell a house within five years of buying it for income.

While Christchurch’s market would slow, Davidson felt the city would still outperform other parts of the country because it was more affordable.

It took a local homebuyer 9.1 years on average to save enough for a deposit. Nationally, it took about 11.7 years to save enough.

Independent economist Tony Alexander said Christchurch’s house prices were already falling, with a 2.9% decrease since February’s peak.

A falling market nationwide meant it was inevitable Christchurch prices would decrease, but they may not fall as much because they were still catching up from the damage done by the 2010 and 2011 earthquakes, he said. ‘‘Christchurch has a different dynamic in play.’’

There was no sign investor sales had spiked, and given Christchurch’s strong market and the fact most owners would still be able to service a mortgage if interest rates hit 6.5%, he did not believe there would be panic sellers.

Overall, Alexander believed prices would plateau across the country by mid-2023.

Ray White Metro director Tony McPherson said prices had been holding in Christchurch compared to other parts of New Zealand, partly because the city had fewer homes on the market.

Figures released by the Real Estate Institute showed 497 homes sold in Christchurch in April, down from 718 in April last year.

Nationally the average home value fell by 2.2% over the three months to the end of April, with just five of 16 major urban areas – including Christchurch – bucking that trend. Wellington experienced one of the largest drops, with a 3.6% decrease, while Dunedin and Auckland had 3.4% and 3.1% decreases respectively.