Substantial revaluations forecast for residential property in Christchurch

Christchurch’s residential property market is in for an unprecedented few years – with property prices set to rise and fall in various suburbs and towns as the market readjusts, according to a senior real estate sales manager in the city.

Karen Phillips from leading real estate agency Bayleys Canterbury said the knock-on effects from the disaster would be felt for a number of years to come – and would impact on both buyers and sellers in the market as the city’s shape, size and demographics change.

These pricing movements would be underpinned by a psychological shift in the way Cantabrians lived and worked.

Ms Phillips said the government’s recent comments of a 10,000 home buy-out for residents of the worst affected areas will open up opportunities for property developers and investors returning to the market.

Ms Phillips forecasts an escalation in demand for residential property in the region’s northern and western suburbs and boundaries - including the existing commuter towns of Woodend, Rangiora, Prebbleton and Lincoln.

“The growth in greenbelt residential development has been emerging steadily around New Zealand for several decades now – particularly in cities such as Auckland, Hamilton, Tauranga and New Plymouth.” she said.

“However, to achieve this change in Canterbury, extensive infrastructure investment is required. This could involve the creation of a light rail network, or the widening of major trunk road routes to accommodate an increase in the flow of traffic from these commuter centres.”

Ironically, preliminary investigations for a light rail network for Christchurch began last year. However previous studies - including one undertaken by Environment Canterbury in 2005 - pointed out the substantial cost of creating the network, which would add an extra strain on Christchurch ratepayers.

“The ‘quake has changed everything,” Ms Phillips said. “Improvements to road and rail networks would increase the attraction of outlying areas such as lifestyle property development Pegasus.”

Meanwhile, residential areas to the south, west and north of the city are also likely to gain buyer attention as their land base is more stable on gravel-based soils. This could see prices move upward quickly as available land is grabbed by residents wishing to remain in the city but move from their existing locations.

However, Ms Phillips said Christchurch people who had in the past balked at the idea of commuting for more than 20 minutes to get into the city may have to rethink their lifestyles. As a result main trunk transport routes from the western and northern suburbs would have to be reassessed, Ms Phillips said.

“It’s feasible and certainly not beyond the realms of town planners taking a long-term view, that homeowners in the more central suburbs of Fendalton, Merivale and St Albans could find their properties backing onto a light rail network, or perhaps fronting onto a bigger four lane arterial road to service these outer areas,” she said.

“Comparing how European cities evolved from the post war ruins of the 1940s for example, those Christchurch dwellings within 500 metres of stops for these public transport services could see demand rise for their properties.”

Ms Phillips said while people relocating out of the city’s southern and eastern suburbs could expect to find the buyer pool for their property to be possibly more limited, it represented an opportunity for investors to purchase and replenish the residential rental property market.

“However, these opportunities of course depend on the Government, the EQC or insurance companies, on-selling the properties in an ‘as-is, where-is’ basis’ and allowing for redevelopment and reoccupation rather than abandonment. At this stage, the big unknown is just what land will be deemed recoverable, and what land would be deemed to be written off.”