Market Review
2010 will certainly be etched into the memories of all who were in Canterbury at 4:38am on 4 September.
The situation from that time has been extensively reported in the media and also communicated on a regular basis to all our owners/investors plus tenants.
Ray White McPherson Property Management (MPM) thank you all for your patience and as the scale of reconstruction unfolds a lot more patience will be required.
EQC is handling over 160,000 claims. For an organisation to expand from 24 employees to over 1000 in 3 months and work as a cohesive group must have been a huge challenge.
The part I personally underestimated was the effects of the aftershocks, currently over 4000, both in terms of ongoing physical property damage plus the emotional impact on residents.
All the property in our management portfolio that MPM are handling the EQC Claims for are obtaining a field assessment by EQC, no matter how minor damage appears. We have already had some surprises as to the level of repair costs from these assessments. Mainly from under floor and ceiling cavity inspections.
All assessments over $10,000 are being project managed by Fletcher Construction. This process of assessment will take time with the share volume. Approx 100,000 are still to be undertaken.
Reconstruction is starting to commence and that is being reflected in the house rental market activity.
Immediately after the quake there was a strong demand for family homes in and close to the most affected suburbs, but some two bedrooms units in the city and less preferred suburbs still remain vacant.
As we approach Christmas, demand over the recent weeks for residential rental property has increased as insurance decisions are made and reconstruction is gaining momentum.
Moving Forward to 2011
The effects of the re-construction is yet to unfold on the rental and property sales market, estimates are now suggesting the cost of the quakes may be between $5 and $8 billion to remedy. The revenue injections at this level will boost the local economy; how long it takes for the broad effect of this spending on the greater Christchurch area is unknown. Business’s, especially inner city retail and small, are having a challenging time.
Properties in the worse effected suburbs are still very slow to sell, with sale prices declining. The increased activity in the rental market is also reflected in the residential sales, but the work required to bring transactions together include further processes to ensuring availability of insurance, structural integrity reports and Geo Tech reports. These reports are giving purchasers confidence to buy property.
The outlook for the broader Canterbury economy has many positives. Dairying, with conversions from other land use, irrigation, mitigating dry seasons, Fonterra expansion at Darfield and strong product prices will play their part.
Tourism will have a strong year from the introduction to Christchurch of Air Asia with direct budget flights to the city, and over 80,000 overseas visitors already booked for the Rugby World Cup in New Zealand.
The resilience that the people of Canterbury have displayed in 2010 will drive a strong future.
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