Introduction

Looking to Invest or buy in the Christchurch property market?

This article breaks down all the most essential facts about the Christchurch property market. This includes which suburbs have grown the fastest over the past 20 years; which suburbs tend to attract the highest yields, and whether the city's house prices are undervalued.

Capital Growth of Christchurch Suburbs

Which Christchurch Suburb's House Price Grew the Fastest?

The Christchurch property market is made up of 85 suburbs. Over the last 20 years, the fastest appreciating suburb has been Strowan. House prices there grew 6.59% on average per year, compared to 4.73% for the slowest appreciating suburb, Westmorland. While the median Christchurch suburb appreciated at a rate of 5.75%.

That means that the percentage point difference between Christchurch's fastest-growing suburb and the city's slowest growing suburb was 1.86 percentage points.

That means there is has historically been less variation between suburbs in Christchurch than there has been in the other two major centres, Auckland and Wellington. In Auckland, the gap between the fastest and slowest appreciating suburbs was 4.7% and in Wellington, that gap was 5.79%.

What does this mean in practice for property investors? If you accidentally invest in a low-growth suburb in Christchurch, you've got less to miss out on than if you invested in a low-growth suburb in other major centres.

Gross Yields of Christchurch Suburbs

Which Christchurch Suburbs Have the Highest Yields?

While Christchurch has historically attracted lower capital growth compared to other cities, suburbs in the city tend to be higher yielding than those in other major urban centres.

The median gross yield across Christchurch suburbs is 3.97%. That compares to 3.12% in Wellington and Hamilton and 3.36% in Auckland.

Right now, the highest yielding suburb in the Christchurch property market is Aranui. This suburb achieved a gross yield of 5.55%. Merivale had the lowest gross yield, at just 2.02%.

Is the Christchurch Property Market Undervalued?

Is the Christchurch Property Market Undervalued?

If you're considering investing in Christchurch, then you've probably already seen that Canterbury house prices have been relatively flat over the last 6 to 7 years. In fact, house prices in the city have levelled off since December 2013.

At that time, the Canterbury median house price was $400,000. By May 2020 that had only grown to $460,000.

While that $60,000 gain is nothing to be sniffed at, it represents only a 2.17% compounding gain every year. That's incredibly low, especially during a time where house prices leapt forward elsewhere around the country.

If you're at the stage where you are considering an investment, then you might question: “are Christchurch house prices going to continue to be flat in the foreseeable future?”

That's the stage where you can look at a graph like the one below which compares the Canterbury median house price with the New Zealand median house price. This helps to give a sense of where Canterbury house prices sit relative to the rest of New Zealand.

Over the last 27 years, Canterbury's median house price has been 88.06% of the New Zealand median.

What that means is that if the New Zealand median house price was $100,000, we'd expect the Canterbury median house price to be $88,060.

However, sometimes Canterbury house prices were above their long term average, and sometimes they were below. And what this really tracks is how fast Canterbury house prices are increasing relative to the rest of the country.

When the line's coming down, this means that Canterbury house prices are increasing more slowly than everywhere else in the country. When it's going up, Canterbury house prices are increasing at a faster rate than the rest of New Zealand.

This can be used to get a sense of whether Canterbury house prices are relatively undervalued or overvalued compared to the rest of the country.

Right now, the Canterbury median house price is sitting at 70.35% of the NZ median house price, which is 16.91% lower than its long term average.

If Canterbury house prices revert back to that long term average, then we'll start to see some good capital gains happening within the Canterbury region.

If that happened, Canterbury house prices would increase by $86,000, without the need for the rest of the market to appreciate.

To get a sense of the Canterbury median house price over time, explore the fill data since 1992:

Christchurch Suburb Prices

Christchurch Suburb Prices

Other Property Markets to Look Into

Other Property Markets to Look Into

If you found this article useful, then you might also like our analyses on the other property markets in New Zealand. You can read all about the Auckland property market, the Wellington property market and the Christchurch property market by clicking any of the links mentioned here.

Ed McKnight

Ed McKnight

Ed McKnight is the host of the Property Academy Podcast – NZ's #1 business podcast. He is an economist, having studied at the University of Auckland and the University of Waikato. He's a frequent writer for Informed Investor Magazine and has contributed to NewsHub, Stuff, OneRoof and Property Investor Magazine.