Some Christchurch suburbs may become 'virtual wastelands'

Real estate agent Tony Brazier says townships on Christchurch city's fringe have received an upsurge in buyer interest since last month's earthquake. Photo / Geoff Sloan

Potential home owners are carefully weighing their options, bringing real estate sales almost to a standstill.

Two devastating earthquakes in five months have altered the Christchurch real estate landscape in more ways than one.

Many houses in so-called "prestige" suburbs, such as Sumner, Redcliffs and Mt Pleasant, have taken a major pounding, with less popular areas escaping virtually unscathed.

Real estate and property investment insiders agree the market has almost come to a standstill as potential buyers weigh their options and those with damaged homes await repairs or an insurance settlement.

But townships on the city's fringe, already fielding an upsurge in buyer inquiries, are bracing for an influx of new residents.

Christchurch real estate agent and property investor Tony Brazier is upbeat about the market outlook going forward.

While he acknowledged some suburbs were likely to be left as virtual residential wastelands with few people willing to return to live in them, he believes a rebuilding city will open boundless opportunities for improvement.

"We're looking at it very positively," the Brazier Property Investments managing director and principal officer said.

Forced out of his heritage building headquarters just inside the Christchurch CBD cordon and working from two temporary sites - one his own Merivale home, Brazier said the hugely destructive February 22 quake, like its September predecessor, "certainly stymied sales".

Real Estate Institute figures released last week showed only 244 properties were sold in Christchurch last month, compared with 519 in February last year.

"If agents can't get to their office and can't get to their computers, then it's difficult to make sales," Brazier said.

Other barriers facing potential buyers in the current property market were "the clamming up of insurance and finance, which also happened after September 4".

Brazier agreed suburbs further away from the central city and the coastline were likely to become more sought-after than they might have been in the past.

"People living in those areas will be feeling quite smug and happy at the moment," he said.

"People will be very mindful of the suburbs that didn't take a hit and those that did."

However, he conceded there weren't "very many places in Christchurch without a crack".

Brazier said the devastated city offered many opportunities and he expected a "whole series of improvements" from developers and investors in the next five years.

"People will be picking up properties from those who are leaving the city and those wanting to shift from stricken suburbs," he said.

"It's interesting that some people are happy to move into someone else's broken home, but they won't go back into their own."

Brazier predicted tradespeople would be "flat out for 10 years" but he doubted the rebuilding could get underway quickly.

"The market will be good for investment as the city rebuilds, but it will be a long, slow process. We're looking forward to it."

Adrian Raine, Christchurch manager for Ray White Commercial and Industrial, said businesses already had taken "flight to the fringe locations" of the city.

"The difference will be seen in the size of buildings," he said. Most people will be reluctant to work in tall buildings and there will be more three-storey, possibly four-storey buildings in the city."

Raine predicted the Sockburn and Middleton areas would be developed more as office park and industrial areas.

"Since the earthquakes there has been a mad rush to obtain office space for businesses relocating from the CBD and the fringe areas have been taken up very quickly," he said.

"It's created a lot of demand for limited space with a lot of competition from companies wanting to get up and running as fast as possible."

Harcourts chief executive Hayden Duncan said the impact of the earthquakes on property sales had been "significant".

"There's no question about that. Settled volumes are well down."

Duncan said there were just 114 sales settled in Christchurch to date this month, compared with 565 in March last year.

Contracts were significantly slower because of engineers' reports and council documents now required before sales could be confirmed.

Insurance and finance was also much more difficult to obtain.

Property listings for Harcourts in March 2010 totalled 936, compared with just 158 by Wednesday.

But Duncan said he was refusing to "buy in to the theory" of a bleak future for real estate in Christchurch.

"The speed at which people are picking themselves up in Christchurch is staggering," Duncan said from his Auckland base.

"On the whole, people are getting back to organising themselves and the mindset is moving forward rapidly."

With the shortage of listings on the market "demand will be exceeding supply".

Duncan said the focus had already shifted to North Canterbury.

"The reality is that Kaiapoi and Rangiora business is really flying now."

Harcourts Holmwood-St Albans agent Ken Sharplin said the market hadn't disappeared and sales were still being made.

"Things are happening, but not happening quickly," he said. "In 29 years in real estate, I haven't seen anything like it."

Sharplin said sales were being delayed by insurance issues.

"I can't understand why insurance companies can't just transfer cover from one property to another."

Real Estate Institute of New Zealand Christchurch director David Rankin said the earthquakes put "a real dampener on a property market just getting back to reality".

"It's going to be a slow recovery," he said. "It changes the whole landscape."

Rankin said there was already "quite considerable" interest from potential buyers in developments on the fringes of the city, such as Lincoln and Rolleston "among the fastest growing areas in the country".

"Certainly the western side of town was let off fairly well, compared to the eastern suburbs."

He said a lot of land remediation work would be needed in the hardest-hit eastern parts of the city to restore "a perception of trust and confidence".

"The question is whether it is economically viable."

The new Pegasus lifestyle development north of Christchurch has been fielding a torrent of new inquiries since both earthquakes.

However, Pegasus Town Ltd sales manager Darryl MacLean said the huge increase in interest had yet to translate into sales.

"Post September there was an increase in inquiries, but no real buying lift, although certainly the interest was fine," he said. "After the February quake, the inquiry level tripled."

Pegasus Town, which has its own water reservoir, sewerage scheme and gas reticulation, escaped unscathed from both earthquakes and passed a full inspection by independent engineers.

While the level of interest in the lifestyle development that is designed to house up to 7000 residents was encouraging, MacLean said sales were "not so fine," hampered apparently by the difficulty prospective buyers were having in obtaining both finance and insurance.

"I believe the inquiry level will eventually lead to increased sales," he said.

"The most significant thing is that while Cantabrians are traditionally territorial and like to stay within their own particular suburbs, that has been demolished."

MacLean said inquiries were coming in from quake-devastated previously prestige suburbs such as Sumner and Redcliffs - "suburbs I'd never have dreamt or targeting".

He said he expected Pegasus Town sales to rise over the next six to 12 months when people were receiving their payouts from Christchurch houses condemned to demolition.

Prices for houses and sections hadn't been adjusted since the earthquakes, MacLean said.

House and land packages ranged from $375,000 to $495,000, with sections from $150,000 to "prestige golf course" lots at $495,000.