Property Report: Agent shaken but not stirred

The office block at 61 Molesworth St, a central Wellington building damaged in the November 17 earthquake, being pulled down. Photo/Mark Mitchell

Questions remain over the future of Wellington and upper South Island real estate, after the November 17 earthquake and ongoing aftershocks.

David Platt, an owner of Tommy's Real Estate, works and lives in central Wellington. The quake woke him as his apartment building shook violently.

"I was expecting that Cuba St would be red-stickered," he said. But that didn't happen, and he believes the damage has been more prevalent on reclaimed land, than in other parts of town.

"There was a little bit more chattel damage in apartment buildings, than in houses," he says.

Sales volumes for November at Tommy's are likely to be 25 per cent down, following the quake.

Platt is not too concerned as sales normally slow over Christmas and he is expecting, other things being equal, for volume to pick up after the holidays.

The hope is that there will not be another jolt, closer to Wellington.
"An 8.1 jolt might be a different story," he says.

Platt says most Wellington buyers are moving from one suburb to another, with only around 5 per cent being from Auckland and 5 per cent from overseas.

"Ninety per cent of buyers are moving from one suburb to another," he says.

Just 18 kilometres from the earthquake's epicentre, David Lee, general manager of Bayleys Marlborough, in Blenheim, says "there is no slowing down of the property market," which is fed by "an eclectic mix", including out-of-town buyers.

There will be insurance issues regarding buildings for sale, though. The Marlborough Express reported a section of town has been shut down and a two-storey building red-stickered.

Some lessons can be learned from what happened to the market after the Christchurch earthquake back in 2010 and 2011.

Paradoxically, the Christchurch earthquake did not bring about a huge property crash.
Many people remained living in Christchurch, where their jobs and families were.

And because the earthquake destroyed 7000 homes, there ended up being more supply than demand, according to Quotable Value NZ.

In the short term Christchurch property values increased between 2012 and 2014. Since then, new houses have been built and prices have levelled.

"Values have risen only moderately in that time," says QV home value general manager David Nagel.

"Prices are lagging behind value growth seen in Auckland and Hamilton, but have increased more by percentage, since the previous peak of 2007, than Wellington and Dunedin," he said.

Other earthquake-related factors also affect property values. Fixing a building to meet today's minimum earthquake standards "can be a very expensive process," particularly for properties built before the 1980s.

Nagel said: "QV's valuers have reported that some buildings with low ratings are either being demolished, or sold 'as is' as it is not cost effective for owners to carry out the work to bring them up to par."

Even in Auckland, the University of Auckland's Maidment Theatre will be demolished, after costs to bring it up to standard were estimated at $16 million.

Any value changes, as a result of the quakes, will not show through for some months, says Nagel.