COVID-19 and the Christchurch Property Market – What Comes Next?
Local mortgage broker Nathan Miglani examines what the future holds for the Christchurch property market over the coming months.
COVID-19 has posed unprecedented challenges to our way of life: a lockdown of the entire country would have been unthinkable just a few months ago. As an ‘essential business’ we’ve been working throughout, but with everything now done remotely, we’ve had to rethink traditional approaches.
Along with the whole team working from home, I’ve been trying new strategies online. In early April, I hosted a webinar with Cameron Bagrie, former Chief Economist of the ANZ Bank, to talk about what COVID-19 would mean for the economy and property market, and a lot of what he said lined up with my own thoughts.
Here in Christchurch, our property market is likely to be reassuringly insulated. Our big boom of recent years was based on post-earthquake insurance pay-outs rather than high levels of lending. That puts us in a more solid position when times get tougher.
While I do expect to see a dip in real estate sales volumes in coming months, staying put means a lot of people will choose to renovate instead. In the first week of lockdown alone, we processed six mortgage top-ups for renovations. So tradies are going to be busy – and that will have a flow-on effect to other parts of the local economy.
While owner-occupied property transactions will slow down, the investment property market is likely to continue ticking along. With record-low interest rates and good-value property in Christchurch, those who were planning to buy a rental will probably still do so. People always need somewhere to live, so rentals remain a solid investment. While it’s true that some Airbnb properties are going back into the long-term rental pool, there’ll still be demand for good, solid family homes.
I anticipate the owner-occupied property market ramping up again next year. Buying and selling the family home is influenced by factors pretty independent of ‘market trends’ – like getting into school zones – so it won’t be subdued indefinitely. The recent trend of people relocating from larger centres, i.e. Auckland, will also continue as people re-evaluate their priorities.
On the downside, development and business lending has tightened up and will remain tight for some time. We’ve had clients who met the requirements pre-COVID-19 now unable to secure finance. But if businesses and investors can wait it out, I anticipate growth in New Zealand’s manufacturing sector in the next three to five years and here in Christchurch we stand to benefit as we have the space to accommodate this industry. That will mean new jobs created.
When it comes to your own financial plans, it is now more important than ever to ensure that any borrowing is at an affordable level. This crisis has shown many people just how little they have as a financial buffer, so make building your nest egg a priority and you’ll more comfortably weather any future market shocks.
Years of experience mean Nathan Miglani knows how to give you the best possible chance of success with your mortgage application. Passionate about helping you through the process of buying a home or business, he’ll find the best deal for your unique circumstances.
