When the Covid-19 pandemic originally hit New Zealand in early 2020, it upended elements of the housing market with changes to realestate buying and selling becoming instantly noticeable. Over a year on since it all began, where do the property values stand within the South Island and what does this mean for those looking to buy or sell?
The New Zealand housing market has seen a steep incline in house prices since the first national lockdown, with rising rents, and a lack of available housing. But just how large is the housing shortage that we continually hear about and are values going to continue on their rapid increase? From June 2020 to June 2021, the median house price across the country has increased by 25.9% from $540,000 to $680,000. However, as we approach the end of 2021, it has been said that house prices are beginning to cool off after reaching their peak. New estimates from Kiwibank point towards there being a shortage of about 67,000 homes, hitting a 14-year nationwide low. So, could this shortage of supply be the reason for the boom in house prices, and is there validity in the predictions for this to slow over the coming months?
According to Stuff, it’s likely that there will be a slow in the rate of house price increases over the months to come as the property market absorbs the recent changes. These include increased interest rates, a $3.8 billion dollar government fund to increase the pace and number of houses being built, as well as the removal of interest deductibility to discourage investors from purchasing more properties while motivating them to sell existing ones. While this may not decrease housing prices, it is forecasted to slow the rate of pricing increases.
So how is this impacting the South Island regions? Has there been a similar market movement and are things looking as glim as they seem? Below we will outline the main regions in the South Island that are seeing big shifts in the market and how Genius Homes can help the housing crisis thanks to a range of affordable and fast-built prefab home options.
South Island housing market by region in 2021
Canterbury housing
The average property asking price in Canterbury is currently $612,722 which is up 16.4% on the same time last year. During the peak of the first Covid-19 lockdown in April 2020, only 202 homes sold according to the Real Estate Institute of New Zealand, this was down massively compared to April 2019 which saw 847 sales. However, since then Canterbury has seen a spike back in the number of both listings and sales, having 33% more homes sold than the previous March. Therefore, it might be reasonable to assume that uncertainty around how long the original lockdown would last and the inability to view homes could have contributed to this short-term slowdown.
With kiwis returning home from overseas in masses, there has been high interest in Christchurch as a desirable place to live. Not only to those returning home but also to the general New Zealand public. Christchurch is viewed by many New Zealanders as a more affordable “big city”. The average house price in Christchurch is currently sitting at $612,722 which is nearly half that of Auckland's $1,177,528. Christchurch is historically known for having more affordable house prices compared to other regional cities in the South Island.
The Canterbury region is also seeing steady growth with new subdivisions popping up in many key locations. In 2020, Christchurch was seeing 1000m² residential multi-staged sections on the market from $195,000 and by putting new builds on a newly developing suburb, you’re more likely to see a higher yield compared to new build property in other major urban centers. Since then, as Christchurch’s growth expands beyond the city limits, a new subdivision has been announced. Selwyn District is to rezone 186 hectares of farmland to host 2,000 new sections and a small commercial area. The city is planning to accommodate its recent growth with additional residential sections.
This is great news if you are looking to invest in the property market. The area is growing which means a focus on new builds is also worth bearing in mind when housing availability is low. Rather than compete for a ‘previously loved’ property in a hot buying market why not build an affordable and convenient prefabricated home?
Southland housing
In Southland, the median house price was up 14.6% on the same time last year to $464,180. It was only the year prior it reached $415,094 – tipping over $400,000 for the first time since records began in 2007. This is a 14-year record high and shows a year-on-year increase of 18.1%. There is no sign of this slowing down any time soon. Southland is currently seeing a huge seller’s market happening, which is bad news for people looking to buy into this region. It is also seeing a decrease in the number of homes available on the market. The property trading site realestate.co.nz has released figures for July 2021, showing that Southland had 135 new property listings, which is a decrease of 41.4% on July 2020. The apparent month-on-month decrease means the housing demand is simply not being met.
According to the Property Guide, Southland has some of the cheapest homes in New Zealand and is a great place to live with its abundance of natural resources. But it seems like this once remote part of New Zealand is seeing its own bubble form and has not avoided the rising house prices seen in most parts of the country. Gore has also seen prices rocket by around 26% since last year which may make purchasing land and building a more financially viable option.
Otago housing
Otago’s property market is made up of 5 districts, which include Dunedin City, Central Otago, Queenstown-Lakes, Clutha, and Waitaki. The most expensive suburb in Otago is Kelvin Heights, which has a median house price of $1,797,350 and the least expensive suburb in Otago is Palmerston, which has a median house price of $290,450.
Otago had some of the biggest drops in the country for the number of houses sold this year. In fact, figures show there has been a year-on-year decrease of 20.7% fewer houses sold in Otago. According to realestate.co.nz, Otago’s average property asking price currently sits at $1,210,233, this is up from $251,000 10 years earlier.
While Queenstown-Lakes was one of only two regions in the country to get an increase of listings versus the same time last year during 2020, up by 21.8%, this was short-lived. Richard Stringer, a Director of Highland Real Estate Group says, “Despite low levels of housing stock, sales volumes to June were also strong, up 18 percent compared to the previous year," he says. "Six months or a year ago there were dire predictions for the housing market but we're still seeing strong demand in Queenstown particularly from Auckland and Wellington". That means that the significant increase in median Otago property price is showing no signs of decreasing the demand. In order to take up residence in this desirable area without purchasing an extremely expensive pre-existing home, many New Zealanders are turning to more modern building methods, such as kitset houses or prefab houses. Both of these options are growing in popularity as they provide a more convenient and affordable option than a traditional build.
As the international tourism tap was turned off by Covid-19, and with the local economy dependent on tourism, Queenstown looked to be the worst affected by the pandemic. With the negative impact around the tourism industry, it meant that many buyers were reluctant to commit, especially with fewer local workers and tourism to rent vacant properties and with many homes still seeking higher than comparable pricing. This original knock on the tourism industry may have temporarily impacted house prices and demand in the area, however, this impact has well and truly come to an end.
How our affordable & fast-built prefab homes can help NZ’s housing crisis
What we are seeing during these unprecedented times is that there is an even greater focus on property and what the markets are doing. Between people making their way back to New Zealand and looking to buy a home, as well as those who spent extended time around their homes during lockdowns realising their house is no longer suitable for them. However, supply is not keeping up with this demand, at least not in the areas where job opportunities and stability are present. Investors too are ideally looking at property as a safe place for their money as it isn’t subject to the volatility of the share market which is also still recovering from the effects of the pandemic. And with more secure interest rates in things like term deposits yielding a very low return, it seems that one of the safest places for spare cash is in property.
This is where Genius Homes can help. If you’re looking for a new home, but also don’t have time to wait 12+ months to go through the design and build process, or don’t want to compete with other buyers for a limited supply of housing then why not try something different? Secure the land and we’ll do the rest! Rather than juggle dozens of subcontractors and shifting schedules, we can work with you to build an ideal home and have it delivered on-site on time. Genius Homes can deliver a brand new home to sites throughout the South Island.
So why not beat the bubble and bypass the stress by building a brand new home for the site of your choice. Discover your new prefab home by downloading our 2021 catalogue.
