Podcast: On the Ground in the Christchurch Property Market | Ep. 200

Posted by Ed McKnight on 20/04/20
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Show Notes

What's Covered in the Show?

In this episode, Micky Limmer from Bayleys Canterbury joins the show to talk about the current dynamics of the Christchurch property market.

Micky mentions that the Christchurch property market tends to move in 5-year cycles, based on data crunched by Knight Frank, a valuation agency. From Micky's view, the Christchurch market has been flat for the last 3 years and he is seeing pent up frustration that is leading to house price inflation.

More people are turning up to open homes and to auction rooms. And in those auction rooms, bids are getting higher.

Most critical to this pent up frustration is the idea that Christchurch is becoming a 'viable option' for Cantabrians who moved away from Christchurch during the Canterbury earthquakes.

The city is developing, becoming more magnetic and attracting these people back into the city from Auckland and overseas.

This is not just because Christchurch is affordable relative to the rest of the country – Christchurch is the 12th most affordable city in New Zealand, yet it is the 2nd largest city – but also because of its typography.


Transcript of the Podcast

Ed McKnight: Hello and welcome along to the Property Academy podcast. I'm your host Ed McKnight and I'm Andrew Nicol and today on the show we're talking about the Christchurch property market and along for the ride we've got local real estate agent, Micky Limmer , who joins us from Bayleys.

Now you are out there Micky everyday talking to sellers, talking to buyers. Tell me. How is the Christchurch property market doing right now?

Micky Limmer: Well, Ed, I think it's trending really nicely. I think, um, when you look at Christchurch, typically it runs in five-year cycles. And the reality is we've had three years of quite a flat market.

And we've been saying, um, the market sort of, it's got a bit of pent up frustration and I think that's been showing through since about September last year. There has been some record sales and the number of people attending open homes, making offers, and attending our auctions are up.

Ed McKnight: And tell me as well. I know that obviously ever since we've had the 2011 Canterbury earthquakes, the market's been at a bit of a flux. It's been up, it's been down. It did quite well initially, but we saw a lot of the population move away. What's happening to them now?

Micky Limmer: Yes. So if anybody wants to sort of track back to after the earthquakes, a lot of the, um, professionals and, um, you know, high paying jobs, they either moved to Sydney, Melbourne, Auckland overseas, UK, USA, you name it. Um, they took up, uh, jobs and other areas.

And, um, what we are finding now more so than we've ever seen is, um, well I like to say that Christchurch is now a viable option for those type of people. And we are seeing them coming back in droves. So, um, to put a bit of a backstory to it, I recently had, um, a couple that have just moved back from Auckland. They've sold a beautiful home up there for just under 2.2 million. I've sold them a property in a Saint Albans Merivale for 1.5 and now, now debt free.

So they have sold their property up there after some tremendous growth. They've moved back and now they can afford to send their kids to private schools. You name it.

Ed McKnight: And just give us a sense as well Micky, uh, what has caused them or what's the trigger for them to be like, cool, we're going to sell out of Auckland, we're going to come back to Christchurch. What's forced that decision or what's, what's been the trigger that made that decision?

Micky Limmer: Uh, I just think at the stage that the city is currently at, um, with the, uh, development that the central city has seen, um, some of the tremendous attributes. We've got the Riverside market, we've got the strip.

We have got some tremendous assets now. And, um, not only that, um, I think the schooling here is tremendous. Um, you have got seriously, I'd say six world-class schools within ten, ten, uh, commute. . .

Ed McKnight: Ten square kilometres?

Micky Limmer: Yeah, that's what I was looking for.

Ed McKnight: Well, we won't ask you to name them either, just because...

Micky Limmer: I might miss one out, but seriously, but yeah.

Ed McKnight: School number seven wouldn't, wouldn't be too happy. Well, we've often talked as well in Christchurch about it being a magnet city. This was identified in the KPMG global report that came out of the UK a couple of years, back, that identified even only a couple of years after the earthquake that the city had really made a turn.

And that it was becoming more attractive for people to move into. Are you kind of thinking that this is really coming to fruition now with some of, with the cluster of all of these things that are, that are coming out from the great restaurants to the good schoolings they add up to make it a really attractive or viable option in your words.

Micky Limmer: Yeah, and I think we're a real city of convenience as well. Um, due to like the topography of the, of the city.

Everything is sort of within reach. Your 15 minutes. There's always car parks. If you want to go to the beach as 15 minutes away, you want to go up the hills 15 minutes away, you want to go to Waipara, it's 35 40 minutes away to some of the best...

Andrew Nicol: 15 minutes times 2.

Micky Limmer: I'm a real estate agent mate. I always embellish.

Ed McKnight: And, and as Andrew always proves, you really can park anywhere in Christchurch, berms included. And so Micky, just walk us through as well.

Are you starting to see house price movement are we starting to see inflation? We've often talked on this podcast that we believe that Christchurch is about 20% undervalued from as long-term proportion of the national median house price.

So are we starting to see movement? I see it in the stats, I see it in REINZ, Christchurch or Canterbury rather increased about 4.1% over the last 12 months. But are you seeing it in the properties your moving?

Micky Limmer: Yes, definitely I think I read a little stat recently that, um, Canterbury has a, a median sale price of 475,000. Now, obviously that does get slightly skewed with, as is where is sales, but we are the 12th most affordable city in New Zealand.

And the reality is the amenities that we've got, the lifestyles that we can, um, have here just makes no sense why we can't see some growth. Um, you know, if you were first time buyer looking to purchase in Christchurch with say $500,000, you have so many options at your disposal.

You go to other major cities in New Zealand, whether that be Wellington, Auckland, Hamilton, Tauranga. You are seriously buying a one or two bedroom unit, at best, and it's not in the sharpest of areas.

Andrew Nicol: Uh, and so Micky actually came back from Wellington. He worked there for his, what was it, two years?

Micky Limmer: Two years, yeah.

Andrew Nicol: Two very peaceful years for me. And, and Micky, what were your drivers for coming back here?

Micky Limmer: Um, there's a couple. We built a house up there and, um, we had some really good success up there, but, um, after two years, I always felt like it was right to give it two years. But, um, after that, my wife and I had a general consensus that we could actually shaded. Yup. She's the boss mate.

But, um, we did have a general consensus that we could drop our quite a large mortgage and buy something a lot more affordable here and have things like holidays where if you have a big mortgage, let's say in my opinion above say six or seven hundred thousand I don't think you can really afford to be going on nice overseas trips and spoiling your family.

So for us, we thought, you know what, let's drop the big mortgage, let's still live a very comfortable life, but not have those day to day pressures.

Ed McKnight: And I think as well, what's really exciting for me as an economist is when you, you kind of predict these sorts of things where you start to see the trends. But when those, those trends or anticipated trends actually turn into stories like this, of real people following the trend, moving back from the more expensive cities and saying, actually, Christchurch is really affordable at the moment.

We can move there. Have a, live a better quality of life because we've got lower mortgages, uh...

Andrew Nicol: And less traffic, less Aucklanders.

Ed McKnight: Uh, well, you still have me down here in Christchurch. Uh, and, and you know, can live that and it's really exciting to see the trend actually turn out into real life case studies of where it happens yourself being an example and all the people who turn up to these open homes.

Micky Limmer: Yeah, absolutely and I try and, um, obviously pass that on to buyers that I'm meeting on a day to day basis saying, hey, like if you're buying, uh, within, you know, very close proximity to the CBD and you're paying 500 for, you know, uh, 550, 600,000.

There is no good reason why we can't see some growth over the next three years. And once touching on that five year cycle, we really should be saying some nice growth.

Ed McKnight: And tell me as well, Micky, that five-year cycle where, where are you kind of pulling that from that? So that's a really interesting point.

Micky Limmer: So partnered up with, um, Bayleys is a company called Knight Frank, and they run a valuation department. And, um, they did a snapshot over the last 20 years in Canterbury. And this was sort of what that they analysed with the, with the Christchurch market.

And obviously with the earthquake coming in there that did change it up a little bit, but, um, yeah, the essentially five-year cycles, and that's what we sort of, uh found out.

Ed McKnight: Yeah. Interesting. Because we certainly are predicting that it's, we are really looking at some catch up growth for Canterbury. There is no good reason why Christchurch should be cheaper than Dunedin city, you know, in terms of house prices.

Andrew Nicol: Have you been to Dunedin?

Ed McKnight: Uh, I've been, I've actually only been there once for a work trip. Uh, I anticipate, uh, just for, just from what you're saying now, that is probably not quite as good if I can say that, sorry for anybody listening in Dunedin, uh, as Christchurch in terms of its amenities, in terms of the population and the opportunities that are available as well.

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