Prospecting in Christchurch - what do you forecast will happen?

[Wiz]

The wife and I are in a situation to buy a third IP. We have our own home, a 4 bed rental in the city we rent to students, and a 3 bed unit in Sydenham. We have a fair amount of equity in our own home but until it is 'fixed' by the EQC that can't be effectively used as banks will only use our RV for loan calculations.

I am therefore keen to make the next purchase something that will offer significant capital gains, but on having a poke around the market and the properties being offered, have a few niggles about where the market is going to be in a couple of years.

Questions floating around in my head are:

Will rents continue to rise, or do you see them reaching a plateau in 2014 as more new housing stock comes on the market? I feel they'll plateau next year, then stay at those levels for a couple more years before dropping away as professional people who came here for the rebuild move out of the region/ head off to 'the next big thing' overseas.

Will houses close to the city centre become more attractive, in what are considered currently unattractive area - Linwood, Aranui, Phillipstown, Waltham? From the prices I see stuff going for, I think a lot of people are anticipating this, but I am not so sure myself.

Will 'the 'vertical rebuild' really draw more people to Chch or will it remain relatively static from 2014? The horizontal rebuild has taken long enough and is probably at its peak now. I know vertical rebuild work needs more trades etc but I'm not convinced it'll be anything like the scale originally anticipated.

Will house prices continue to rise as demand remains, or level off as more new stock comes on line? Prices have gone daft in my view, but then I've said that before and they have just kept on going while I sat and watched. I see pending interest rate rises slowing this down in the next 2 years but am keen to get involved now so we can build equity in anticipation of a slow down and then picking up a deal or two as the pressure comes onto those who are overextending now and will be stuffed by anything more than a 1.5% rate rise.

So - where do you Chch investors in the market see it going?

[Keys]

Tapped out for RV equity at the moment waiting on the new RVs. Won't use anything else but that. Has ensured a good nights sleep over the last few years or so. Therefore, I'm waiting for the next RVs and anticipating that the 20% requirement will kill off some of the competition. No rush for me at the moment but when they come in I'll be hunting.

[DazRaz]

Personally, I'd expect prices to plateau in 2015 and rents to do much the same if not fall. The problem will be when the insurance money dries up after the rebuild comes to some sort of conclusion. It's still a way off as little other than minor repairs have been done so far.

[Orkibi]

I can talk for Addington where 3 bedroom house rent is increasing from $365pw to $435pw+ in around 18month.

Value is up by around 12%-15% in the last 12month for Living Zone 3 land.

[Dugster]

I have just bought another 2 bed unit which I'll modernise and rent, but after that I think I may look outside of Christchurch to give a little variation to my portfolio. I think there's probably another couple of decent years ahead, but hard to predict after that. I think I'll look North perhaps. Personally I don't think prices will drop, but possibly plateau. Rents however may drop as more stock comes online, which combined with interest rate rises may find a few people vulnerable in a year or two. At which point I'll come back in...

[rent]

The rebuilt activities will reach peak by the end of 2015 (may delay due to useless C.C.C ) . After rebuilt, more new immigrants would settle in Christchurch and some builders leave for overseas. Price stays plateau. I am building three houses at Wigram Skies.

[Orkibi]

I hear an ANZ economist predicting the top of the building activities in chch to be 2017.
this sounds more realistic then 2015 considering the size involved.

[rent]

building a residential house in Christchurch is really slow, compared with Auckland. 2016-2017 may be junk years for investors

[Orkibi]

I'm hoping to build around 2020, when things hopefully settled and passed the pick.

[Razzzor]

I'm hoping to build around 2020, when things hopefully settled and passed the pick.

Crikey you're quite patient then, that's still 7 years away.

[charlotte30]

Dear Rent Agree with the slow building in Christchurch. I know of a builder who has been waiting for 7 months for building consent. What is your square metre rate for building? Are you doing this through a building company or doing your own project management? Cheers Charlotte30

[Orkibi]

yes im, only in 2017 i will be over the 10 years Rule, considering the shortage of workers and cost of building im willing to wait for the optimum time.

i will be hoping to to pay of the land component buy then.

[rent]

Hi Charlotte, the consent is slow....................but grant a section title from CCC also slow, even in Wigram Skies. I have a friend who works in bank. We bought sections together last Nov, she had consent now, but no title !!!! I have title, but no consent !!! Just cannot start the construction. I personally think Christchurch City Council has no ability to manage a city with around 400,000 residents. They probably better to manage a town with 200,000 residents. I am building with construction company, the cost per sqm would be $1460-$1580, depends on what specs you want. Also for the developers, they start selling sections but title would be due around one year time, what the hell!

[Wiz]

Well then, bearing the last few posts in mind maybe the property ease won't happen till late 2015 onwards so worth a punt. Have made an offer on a L3 property with an eye on future building, so will see how it goes. The first of many I suspect, as there are few 'bargains' around anymore. Saw a place auctioned last week - bought in Jan for $190k, sold for $250k September. Someone did very nicley there - and it was just buy and hold, zero done to improve it apart from hack the fornt garden's trees back.

[Hamish_West]

I work for a building company in Christchurch, certainly viewing a peak of 2016/17. Biggest thing to be careful of with L3 land is the underlying ground, especially to the north east of the city, some of that land needs intense piling. If you get a section that can take a rib raft without piles it's only going one way in value.

A couple of months ago we had another 2300 Chinese and their families approved to come to chch for the rebuild next year, on top of the normal influx involved with a massive rebuild, and we are already seeing people forced to look outside of Christchurch for rentals and family homes (we build a huge amount in Selwyn and Waimakariri compared to the last few years already). I have to disagree that rents are going to plateu within the next few years in Christchurch based on that. Proximity to a town centre is always a big price factor in any major city, and at the moment our central city is cheap compared to the surrounding areas (though we are seeing the million plus apartments being built and sold still).