Central City Survey

Canterbury Earthquake Recovery Authority (CERA) is asking property and business owners plus other users of the Central City how they want to rebuild the City Centre.

The future of the Central City both in terms of rebuild timeframe and its ultimate significance as Hub of the City will be determined by organisations and people’s confidence.

A confidence to work, play, invest, insure and for some to live, in a new Central City.

The majority of infrastructure is now entrenched in the suburbs. It is of concern Government Departments are entering into long term leases in areas outside the Central City. The initial residential rebuilds are around the satellite towns of Rolleston, Rangiora, Lincoln, Pegasus Town, etc., plus the outer City subdivision in the North and West will drift activity from the Central City.

While appreciating that activity must continue, this commercial and residential development will dis-encourage de-population but will reinforce a City of Satellites and potentially compromise a significant Central City.

The key to robust Central City rebuild and growth is to create an environment where people are attracted to safe, engaging range and choice of activities plus services that meet the need of the whole cross-section of the greater Christchurch population.

We applaud the CERA approach, and encourage people to have their say through this survey.

The majority of the commercial rebuild will be undertaken by the private sector. Many of the building owners are property investors not developers, support and encouragement to reinvest in the new Central City is important.

There is already anecdotal evidence of capital flight.

Significant areas of commercial property demolished post-earthquakes were old unreinforced masonry 2 or 3 level buildings.

Many of these types of buildings were not effectively utilised pre-quakes, often only the ground floor was retail, with storage or vacant in the above levels.With these buildings there were issues around change of use, the economics of bringing the property up to code. These obsolescent buildings did provide cost effective space to some of our more colourful retailers adding character to the City. To provide facilities for these types of traders in the future a market style environment could be considered around the retail and entertainment precincts. Perhaps a combination of our existing markets small scale retailers.

We look around some of the great Cities of the World and see how market places enhance a Central City, Barcelona & Budapest as a couple of examples.

The establishment of the Cashel Street container retail area has given Cantabrians a taste of a different style of shopping, with very positive feedback and initial results.

Traditional retail in Christchurch has been Mall or strip shopping.

The new Central City in the short – medium term will require a lot less land for Commercial use.

The encouragement of medium density residential development within and close to the Central City would be advantageous. More people in the City Centre sooner will result in a wider range of goods and services developing. Thought should be given to new sporting and recreational facilities as well, which should be integrated into the mix.

The Central City has an opportunity to establish as a vibrant environment but for this to occur it must be accessible and attractive for people to work in, to shop in, to be entertained in, and live in.

Tony McPherson

Market Update

The seismic events over the festive season gave a reminder to Christchurch residents of the effects of ongoing aftershocks.  Although the physical damage was limited and mainly minor, the physiclogical effect is having an impact, especially those seeking a quiet chill out time at home over the break.

As we have seen following prior events life continues and the resiliance of Cantabrians is strong. 

The events are following a predicted pattern that will lesson in frequency and intensity as time goes on.

Availability of quality residential rental properties remains short in supply.  Rents have steadily increased for these types of homes in the least affected areas.  We see a continuing strong demand for these properties.

Market Update – Student Accommodation

McPherson Property Management where pleased with the initial response to leasing and re letting of student properties for the 2012 year.  Over 90% of these properties were let in a relatively quick period against University of Canterbury projected student roll declines of over 1500. The inquiry for the remaining student properties is now slow when compared with the wider residential rental market.  Properties available in the university area currently number over 160 out of only 850 available on Trade me in Christchurch.

Demand, especially for family homes in the least earthquake affected areas is strong and rents are increasing for these properties.

Population trends are difficult to gauge with some of the headlines in the media at times misleading, with % population drops reported in the city not taking into account the redistribution of people over greater Christchurch.

The difficulty of obtaining new insurance continues to keep the rebuild phase at a low level, but the enormous de – construction continues, with the high rise buildings a focus.

Market Update

The third quarter of 2011 has seen a recovery in sales volumes in the Canterbury region, more particularly in the least quake affected areas of Christchurch City, with a 35% increase in sales numbers for August and September 2011 over July 2011. 

The strong buyer enquiry from owners of Red Zone Residential properties was the main factor in this increased activity along with first home buyers and people transferring to Christchurch. 

Lack of properties on the market was an inhibiting factor for some buyers but September saw an increase in properties available for sale. 

Sales volumes within the City are still clearly divided between the least affected areas and the Central City, Eastern and Hill suburbs.

Number of House Sales     June 2010   June 2011  Sept 2011
Hill, Central & Eastern Suburbs  231 87  148 
North & Western Suburbs                 242  175  291 

 These figures also show a gradual increase in sales volumes in the most affected areas. 

The September 2011 median price of $348,000 has eased back in Christchurch City from $356,250 in August 2011, but is up over 5% for the year. 

Certainly there is a firming of prices for property in the North and West of Christchurch plus Selwyn and Waimakariri Districts. 

  

Comparison of Sales Numbers in Canterbury

  June 2010  June 2011  September 2011 
 Christchurch 473  262 439 
 Selwyn District          40 36 41
 Waimakiri 59 79 125

 Statistics for September 2010 were not used for comparison for obvious reasons.

Market Update – Sales and Property Management

Residential Sales

Activity in the least affected areas is continuing to be strong and it is pleasing to note that an increasing number of properties are coming to the market.  This increased number of properties available for sale is welcomed by potential buyers after the extremely low level of choice in the period from late July through to September. 

Some of the accidental landlords are choosing to sell.  These are property owners who rented their homes rather than sell after the residential property market correction of 2008.

There is anecdotal evidence of prices firming in the least affected areas but this from the lows of 2010. 

Insurance is continuing to be an issue especially with new build dwellings and tenants generally are unable to obtain contents cover.

Residential Rental

Demand is very strong in the least quake affected areas with vacancies at extremely low levels. 

The student properties have in large been re let for 2012, with the better quality properties being leased quickly.  This is a pleasing result in light of the projected drop in the Canterbury University roll of 1500 students for the 2012 year.

Property Market Update

Property Market Comment

 The Christchurch housing market sales volumes continue to recover to pre-earthquake numbers.

 August 2011 recorded 410 residential sales compared with 310 in July 2011.

 The activity in the market place is primarily for first home buyers and property owners in the Red Zone.

 A shortage of family homes in the least affected areas is creating strong competition for those available properties in these locations.

 The difficulty in obtaining insurance for new housing is slowing up this option for buyers, with only 1 or 2 of the large home builders being able to arrange cover.

 Indications are that insurance should free up the longer we are free of significant aftershocks.

 Those who may be considering selling certainly now is a good opportunity, as house building increases buyers will have greater choices.

Rental Market

Demand for quality rental properties in the least affected areas is strong with a very limited selection available.   Rents are firming in these areas, which is the Northern and Western suburbs, plus Selwyn and Waimakairi Districts.

It is pleasing to note good demand for our student accommodation for the 2012 year in light of the substantially lower projected roll numbers.  As always the better properties are leased first.

The residential property market demand has ebbed and flowed through the past 12 months, with a period in mid May 2011 where vacancies were at levels above pre-quake.

We now note that current availability of property is at a historical low level using “Trade Me Rentals” listings as a barometer.

Christchurch Market Update

The Christchurch market place for residential properties, both sales and rental one year post earthquake is clearly divided into 2 markets. 

The Central City, Eastern and Hill suburbs, with low enquiry making sales and letting difficult to obtain.

The contrast in the North and Western suburbs plus the outer districts is opposite, lack of properties available for sale and rent putting upward pressure on house prices and rents. 

It has been difficult to obtain a clear trend and population movements with an initial exodus of approximately 26,000 according to election role stats.

The red zone property owners are now receiving the Crown offer to purchase their properties that is now 6,000 people who will be making housing decisions over the next 9 months, building, buying, renting or moving outside Christchurch.

The sales market in the least affected areas are experiencing strong inquiry from first home buyers, people transferring to Christchurch and Red Zone buyers, creating multi offers and excellent auction clearances.

In the rental market available properties are below pre-earthquake levels again, with strong enquiry on homes in the least affected areas with rents firming.   The opposite is happening in the eastern suburbs with low enquiry and difficulty attracting tenants.

Insurance, or inability to obtain cover is a major issue.  Insurance companies are not taking on new business exposure in Christchurch; the only cover obtainable is through assignment of a policy or renewal.  This is okay for existing properties where the income owner has a good credit rating, but for new builds and tenants seeking contents insurance the current situation makes it extremely difficult to obtain cover. 

What has become very apparent is the Christchurch rebuild will take many years but the high amount of resources input from insurance, local bodies, private sector and Government will see a sustained strong Canterbury economy.

Market Comment July/August 2011

In reviewing the residential sales for Canterbury in the 2nd Quarter of 2011, April and May showed a good increase in activity and sales post February and March. The aftershock on 13th June 2011 saw sales volume figures for June 2011 decline, unlike the periods following September 2010 and February 2011, this was less significant.

 When peeling back the sales statistics we still have two distinct markets in the City, plus the outer districts of Selwyn and Waimakariri to illustrate this.

 Number of House Sales                          June 2011                              June 2010

 Hill, Central & Eastern Suburbs          87                                              231 

North & Western Suburbs                      175                                            242 

Selwyn Districts                                         36                                              40

Waimakariri                                                 79                                              59

 The sales market activity increased significantly following the Government’s announcement on 23rd June to purchase Red Zone residential properties. This Government decision has given 5000 people the opportunity make future housing decisions.

 The owners of Red Zone residential properties are considering future housing options, this is evidenced by increased website inquiry, greater open home attendance and subsequent written sales.

 The finalisation of assessments in the orange and white zones will create a steady stream of people who will be able to also make decisions.

 Demand for homes in the North and West of Christchurch is putting pressure on supply. New properties coming to the market are attracting strong interest.

Tony McPherson

Director

Ray White AJ McPherson & Associates Ltd

Licensed (REAA 2008)

McPherson Property Management – Christchurch Update

23 June 2011

Christchurch Update

The government announcement today has given some of the people in the worst affected areas the opportunity to make decisions about their homes and a choice to move on.  CERA has set up a website to advise on the classification of land.  You can view this site at http://www.landcheck.org.nz/

The aftershocks continue causing some minor damage to properties closer to the epicentres of these events.  The greatest impact is of a psychological nature, people living and working in an environment with a constant level of underlying stress of wondering, where and how strong, the next aftershock will be.

Since September 4, 2010 Cantabrians have experienced over 7000 aftershocks, the resilience showing by the majority of the population is remarkable.  Some of our tenants are struggling to cope with living in Christchurch and are choosing to leave if they can.

We are having requests from some tenants seeking reductions in rent for loss of amenities.  The majority of owners have made concessions where these requests were genuine.   MPM have not been to the Tenancy Tribunal in relation to a loss of amenities hearing, but we have anecdotal reports of some significant rent reductions being ordered.

The Residential Rental Market in Christchurch is in 2 distinctive parts.  The North and Western area has good activity with properties in demand.  The Eastern Suburbs have rental properties available and many with only minor cosmetic damage but with little or no enquiry.   Depopulation is a factor but difficult to define the level and trend.  Canterbury University is projecting a reduction of 1500 students for the 2012 year which could impact on those specialising in student accommodation.

I thank our team who continue to function extremely efficiently in these challenging times in the role of custodian of your asset.  I thank you for your patience and understanding of the process’s we are going through and seek a continuation of this understanding.

Tony McPherson

McPherson Property Management

Temporary housing going ahead in eastern suburbs

The Christchurch City Council website has posted information regarding the temporary housing being built in Linwood.  With prices comparable to existing rental property stock and floor areas significantly smaller, is it worth it?

For more information about the temporary housing click here