Cities With Growth Potential – Christchurch and Wellington

Christchurch & Wellington property prices have been trailing behind the growth experienced in Auckland since 2011, which has created a significant price gap between the two cities, to a degree that has never been seen before. This could indicate Christchurch & Wellington prices will increase over the next few years, while the national balance is restored.

New Zealand housing is a national market, so while we can look to the usual indicators such as net immigration, rent prices and building consents to make short term regional predictions, the basic overriding economic principal of supply and demand will eventually play out, and with that comes the effects of competition, so the long term pattern shown since 1992 should remain true in the future.

In other words, Christchurch & Wellington housing is competition for Auckland, and provides a healthy alternative for those comparing property investment options between the three main cities. As more and more are priced out of the Auckland market, they will look to these substitutes instead.

There are two things that could happen to close the gap. Christchurch & Wellington prices go up, or Auckland prices go down. The latter seems unlikely, due to Kiwi investors’ reluctance to lose money. History suggests we merely hold onto our property in less prosperous times, rather than selling at a loss. To the most part, we see fewer sales in those conditions, but not lower prices.

If you’re playing the long game, which is the safest strategy for a normal Kiwi family, Christchurch & Wellington have massive growth potential now, so could be the cities to buy in right now.