Why Invest in Christchurch Property?
The earthquakes dramatically reduced the number of Christchurch properties available to rent. Available rental properties listed on TradeMe dropped from 1,600 per month to just 697 in the year to February 2012. In our experience, when the listing level falls below 700, rental rates tend to get squeezed upwards.
As a large proportion of red-zoners have opted to take the land only government payout, many families will need rental accomodation until they receive their building insurance payouts, which could take several years. Further demand pressure will come from 20-30,000 tradesmen, related professionals and their families moving in for our $30bn + rebuild.
The supply side is also pressured with building consents over the last few years being at just 50% of the level required to satisfy annual demand nationally, leaving a residual demand overhang that is yet to be satisfied. However, the government is committed to rebuilding New Zealand’s second largest city, giving us the best medium term demand profile in the country.
Despite the seismic and economic turmoil, property prices have continued to increase in Christchurch. Over the last 40 years, despite recessions, global pandemics, price freezes, Asian crises, share market crashes and a global financial meltdown, the average Christchurch house price has increased from $11,000 in 1971 to over $440,000 in August 2013 - a 4,000% increase.
With notable economists predicting low interest rates for the foreseeable future, as a medium to long term investment, property offers good returns for relatively low outlay due to financial leverage opportunities. As an added bonus, you’ll be able to sleep at night knowing your investment is protected by the EQC scheme, and should be less volatile than the share market.