Mortgage

Local mortgage adviser, Nathan Miglani, looks at the facts of the matter when it comes to buying and selling property in Christchurch and Canterbury after COVID-19

When Level 3 arrived, the phones started ringing – and they haven’t stopped. I don’t think anyone in the real estate industry could have predicted just how busy things would be post-COVID-19 lockdown. In our office, we’re helping more people than ever. And no, we’re not talking about panic selling, we’re talking about lots of people wanting to buy homes … first homes, next homes, investment properties.

I was talking the other day to a salesperson for a subdivision in Rolleston. They just released a new stage post lockdown and within three weeks they had sold half of the newly released sections. In their forecasts, they had predicted taking until October to reach this number of sales!

A lot of first-home buyers are eager to get into the market, and for good reason. With interest rates at unbelievably low levels and some great schemes in place, including government-backed First Home Loans and First Home Grants for those that qualify, getting into your first home hasn’t been this straightforward for many years.

Investors are also more active than they have been in a long time. LVR restrictions have been a handbrake on investors for some time, but the Reserve Bank’s move to ease these restrictions for a period of 12 months post-COVID-19 has been good to see. In reality, not all banks have eased their own policies in line with the Reserve Bank’s direction, but there are some that have. This is where working with a mortgage adviser really is key: your own bank might not have made mortgage finance any easier for investors to obtain, but working with a mortgage broker gets you access to all the banks (and some second-tier lenders), so you get to take advantage of the best policies around.

Keeping investors excited is the availability of really good quality, affordable properties here in Christchurch. We had our market correction here a year or two back, following on from the heat of the post-earthquake market, so we now enjoy a well-priced market. That means you can pick up a standalone three-bedroom home on 600 sqm just a short drive from the CBD in suburbs like Bishopdale, Belfast or Hoon Hay for under $450,000. That kind of package is just unheard-of in the other main centres, like Auckland and Wellington, these days. You can see it in the latest figures released by REINZ too. Median house prices in Christchurch were up 3.4% in May 2020 compared to the same time last year, a nice, steady rise compared to the more volatile markets of Auckland (up 7.1%) and Wellington (up 9.3%). Further to rise means further to fall!

And these are the kinds of properties that do well as an investment in any market. There’s a lot of talk about short-term Airbnb rentals and how they’re faring in a global pandemic, but solid standalone properties that make comfortable family homes aren’t so vulnerable to market fluctuations – after all, people will always need and want somewhere safe and warm to live.

On the other side of the equation, homeowners are biding their time and sitting tight. Perhaps there’s a misconception that the market must be quiet post-COVID-19 and that waiting it out might mean a better price down the track. But the buyers are most definitely there, and they’re serious. They’re not ‘testing the waters’; they’re making good offers. In fact, many of the property transactions coming through our office have been multi-offer situations – with more than one buyer trying to secure the same property. Agents are crying out for stock to meet that buyer demand.

All of which leads me to believe that house prices in the local Christchurch and Canterbury market are likely to increase by 5% in the next 12 months. But, of course, as the events of the past few months have shown, we never quite know what’s around the corner, so if you are taking on new lending, play it safe and keep it at an affordable level, so you can rest easy in the event of any market shock in the months or years to come.

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