The monthly NZ Property Report published on the first day of every month provides a view to the supply side of the property market, nationally as well as regionally. This month of March 2011 is the first full month since the devastating earthquake of 22 February, and so provides an opportunity to examine the impact that the quake has had on the property market in Christchurch and the wider Canterbury region.
Property for sale
The level of new listings coming onto the market in March was in some way fairly resilient. A total of 1,297 new properties came onto the market across the wider Canterbury region in the month. This was down 36% as compared to March last year, a significant fall when the rest of the country only saw a 10% fall in listings year-on-year. By comparison the impact of the September quake last year saw a fall of 26% in Canterbury compared to a 15% fall on a year-on-year basis for the rest of the country.
Using an assumption of the representation of the region to the total national property market it is estimated that c.480 less properties were brought to the market in March than would have been the case at this time of year had it not been for the impact of the quake.
The chart below shows the monthly level of new listings for the Canterbury region. At first sight it does not show any dramatic fall off of new listings, either after the September quake or after the February quake. The highlighted section shows that the September quake set in play a slower level of new property listings which has weighed down on the market for the past 6 months and which based on the devastating impact of February will continue for many months to come.
The interest in property
Clearly the human impact of the Christchurch quake is the priority for people in the immediate aftermath of a disaster, however business and people pick themselves up and resume some state of normality. The real estate industry is an industry serving customers everyday and somewhere close to 1,400 real estate people live and work in the region which operates from over 120 offices of which 87 are based in Christchurch. There have already been notifications of 31 offices that have ceased operating from their prior location. Many have found temporary offices or consolidated operations in an existing office that thankfully has not been affected.
Their business relies on consumers and ascertaining the level of consumer interest in property is something a website can uniquely do as every day the traffic to the site can be assessed to see trends and behaviours.
Prior to the September quake the daily visitor number viewing Canterbury property was around 3,700, this fell to less than 2,000 in the days after that quake. Now 6 months after that quake the daily traffic is down around 20%. For the February quake that lower daily level of traffic again fell to below 2,000 per day in the immediate days after, and is now back to around 2,100 – a 35% fall from the period preceding the quake.
The chart below tracks the daily visitor traffic using a 7 day moving average – the red line tracks the February quake whilst the blue line track the September quake with both lines using the same axis which is 40 days preceding the quake to 70 days after the quake in the case of the September quake.
The chart certainly demonstrates (although not surprisingly) that the February quake has had a more significant impact on property searching in the region. At the same time the region has not ground to a halt. Property is being listed, marketed, viewed, researched, enquired about, negotiated and sold.
Interestingly a larger proportion of those viewings of Canterbury properties are being made by people outside NZ. In the month of March 29% of all visitors to realestate.co.nz viewing Canterbury properties came from overseas, this compares to 25% a year ago. That proportional growth though does result in lower absolute numbers as the chart above highlights. However a higher representations of Australians are researching Canterbury property during March than a year ago – some 15% of all visitors checking out Canterbury properties were from across the Tasman, up from 12% a year ago.
Property for Rent
Rental activity is far more dynamic than property sales. Property for rent comes onto the market more frequently and stay on the market for a shorter period. In the Christchurch market the availability of rental property has seen a significant fall off in the period since the February quake. The chart below tracks this trend.
The September quake hardly seemed to impact the availability of rental properties, whereas the weeks following the February quake has seen available inventory fall from just under 900 to just over 530. The available inventory of rental properties featured on realestate.co.nz comprise those properties being marketed by property management companies rather than private landlords. In speaking with some of them they see this decline as the result of two major factors. Firstly the demand for rental properties grew significantly straight after the quake as people searched for somewhere to relocate to from uninhabitable houses. Secondly a reasonably large proportion of rental inventory in some key areas of the city has had to be withdrawn as it is uninhabitable.
The level of activity of people searching for rental properties varies significantly from week to week. The impact of the Christchurch earthquakes has only further exacerbated this over recent months. The chart below tracks the daily (7 day moving average) level of searching for rental property in Christchurch city through the past 10 months comparing this year with last year.
The chart shows the almost instantaneous impact of the quake on searching for rental property in both the September and February period. The September quake caused a sudden drop followed by a minor increase in the next 2 to 3 weeks after the quake. After that, the next 4 months saw a lower levels of activity up until Christmas, by which time activity was returning to normal. The February quake equally resulted in a dramatic fall, however within a few days searching spiked to a very high level for a couple of weeks before falling back over the last week and a half up to the end of the month.