There has been a big surge in the number of properties for sale in the city in recent months, but one property type in particular is in oversupply – two-bedroom townhouses, OneRoof reported.
There were more than 1700 properties for sale on its site in Christchurch in mid-December and about 10 per cent were two-bedroom townhouses.
But Harcourts Gold salesperson Cameron Bailey (right)told OneRoof there was actually a lot more than that for sale, because often the listing was for one, even though there were many more in the same development also available.
“Two-bedroom townhouses – there would be heaps and the thing is you are not even seeing half of them because they’ve got a block of six but they list one of them.
“So there’s one online or two online but there’s really eight for sale or six for sale because it’s kind of a hidden thing.”
Bailey told OneRoof a lot of the townhouses had been bought at the peak of the market or off-plans as investment properties.
It did not make financial sense to hold onto them now.
“People were sold them when interest rates were 2 per cent and 3 per cent and now they are 6 per cent or whatever they are and it’s hard to get them to stack up now,” Bailey said.
While there was demand for them mainly from investors, he said there were currently more for sale than there were buyers for them.
“The demand has dropped back from when everybody was buying them and everyone was buying them as investments based on the advice they had from financial advisers,” he told OneRoof.
Most of the two-bedroom townhouses were brand new or being sold off the plans, but there were some finished a few years ago that had been rented out.
Pero said some of the owners had decided they could not afford to keep the townhouses, because the high interest rates meant the rent wasn’t covering mortgage repayments.
“I’m appraising quite a few where people would have bought them two years ago for $800,000 and are now reselling for under $600,000,” he told OneRoof.
“That’s a pretty tough conversation to have with some people because they had aspirations of becoming wealthy off these properties and now they are being told that their neighbour sold not long ago for $200,000 less, so that affects the value of their property.
There are people that want to sell, but know if they do sell they will be losing hundreds of thousands of dollars.”
Some people had bought them using equity in their homes so weren’t necessarily losing cash, but were losing equity in their family homes if they sold, he told OneRoof.
He said two-bedroom townhouses with no car parks only tended to appeal to investors as owner-occupiers usually required something bigger, with at least one if not two car parks.
“No car parks are a pretty big deal-breaker for first-home buyers because they are owner-occupiers,” he told OneRoof.
“They will sell, but it might be at a price point that the vendor may not like. Some of them just sit there and hope that somebody will come along and pay the price.”
However, three-bedroom townhouses with car parks were much more desirable.
This year Pero sold three townhouses in the Worcester Terraces development on Worcester St, which had made gains of around 30 per cent in a few years.
He told OneRoof the properties had been picked up for about $1m and been resold this year for between $1.25m and $1.3m.
Pero told OneRoof he believed they had been able to turn a profit because they were high spec, in a desirable location and had car parks, which made them suitable for owner-occupiers.
He is selling a two-bedroom, two-bathroom townhouse at 13/7 Bangor St in the central city and thought this would appeal to first-home buyers or downsizers because it had a car park.
The current owners had purchased it in June 2021 for $449,000 as their first home but were starting a family so had decided to move out to a larger property in the suburbs.
“It’s a pretty usual scenario – people go from buying in the central city when they are young and then they move out and will probably come back when they turn 60.”
Trinity Real Estate agent Damian Dellabarca was also aware of some townhouse owners who had bought properties off the plans during the boom and were facing big losses if they sold now.
“They were cheap investment properties. It was a cheap easy investment opportunity for people to get into. And long-term they still will be a good investment as long as you don’t sell it in the short-term,” he told OneRoof.
But some of the owners couldn’t afford to keep the two-bedroom townhouses because the increase in interest rates had made it too expensive for them to hold, he said.
“Some of them – if they have to sell – will be selling at a loss.”
The problem was not just downtown but citywide, he said.
