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POSTED: 2 February 2012
 

Insurance greatest future impact on values

It’s certainly an extraordinary residential market out there at the moment.

There’s no historic blue print or traditional property cycle at work right now in Canterbury.

Our market drivers are as unique as the seismic land we’ve built upon!

The short of the long is that the basic supply/demand equilibrium for residential property in Canterbury is out of whack. 

The big power player is now the insurance industry.

According to the Reserve Bank governor Alan Bollard, the time frame for the Canterbury rebuild has slipped substantially back into 2013 following the December aftershocks.

Until “new” insurance policies are given the green light, ‘new build’ housing stock will struggle to keep up with an ever growing demand.

Pressure will continue on current sales and rental prices. Sales statistics certainly support a migration out of Christchurch to Selwyn and Waimakariri.

Although the seismic ‘unknowns’ seem to remain endless, one thing is for sure, the impact of insurance industry decisions regarding Christchurch will continue to be a massive value driver into the future…
 
 
 
 
 
POSTED: 29 August 2011
 

Auditing Your Red Zone Floor Area

Prior to Government offers being received, we were hoping to be of great assistance to red zone property owners looking to object to their rating valuation…we have hundreds of people sign up to our “free red zone report”.

But, as they say, the devil is in the detail – and it’s now apparent that the scope for objection is very narrow. 

One of the only options to seek an adjustment in the Government’s purchase offer is if your rating valuation has been based on an incorrect floor area.

So the question then arises – how do you know whether your floor area is correct? 

I think it’s interesting to note that for a registered valuer, it is professional best-practice to always undertake an onsite measure-up of a property’s total floor area as part of a registered valuation.  I would never solely rely on the land records data to undertake my valuation calculations.

Although I believe the possibilities of floor area errors are not high, they do occur, and for what’s at stake should be thoroughly audited.

Where errors could occur:

        a)      Discrepancies between the original measure-up when the house was first built, and current floor areas, due to changes to buildings over time.

Given that most of these properties would never have been revisited, some would have had renovations/extensions over past decades never recorded.  This is less likely to be an issue with newer suburbs, but a good percentage of the red zone is much older housing stock.

        b)      Human data entry error between original hard copy figure and that entered into the digital land records database.

        To ensure all your pay-out options have been investigated thoroughly you should check the acuracy of your floor area.

      Check out our simple steps for auditing your floor area: CLICK HERE

 

 

 

POSTED: 23 June 2011
 

Initial Response to Government's Land Report

I may now be living in the centre of the western world’s most costly natural disaster – but, hey, I can’t help but be grateful I’m living in New Zealand!

In an international insurance context the ‘government package’ put forward today is unprecedented and commendable. It will save 1000s of Cantabs from financial hardship.  Elsewhere in the world it would be just hard luck, and we’d get nothing for our land.

This is not to say there will be any real winners.

While ‘pay-outs’ are calculated – true compensation for what one’s lost is harder to reckon.  For 5000 home owners tonight the question of comparable ‘affordability’ elsewhere in Christchurch will be top of mind? 

But of course ‘big picture’ is one thing – for those of us now working at the coal-face of helping people with major property decisions, the devil will be in the fine print!

And that is what I will be working through in the coming weeks…

 

There are though, a number of initial key points I want to make following the release of today’s ‘land report’:

1.  Rating Valuation Option: 

It’s no secret as to how I feel about reliance on RVs when buying, selling or re-financing in normal market conditions, but in the government’s defence, I can totally appreciate why a mass formulated tool was necessary for calculations on such a massive scale in such extraordinary circumstances.

So hopefully you are in the majority for whom a pay-out based on RV seems quite fair – or even in the small percent that find themselves with more than they expected.

But there is no getting around there are discrepancies with RVs.  It is a fact that some RVs in the red zone will not reflect a current market value before the September 2010 earthquake – particularly if improvements have been made since 2007 – they are guide to valuation but will have a margin of error. There will be a percentage of home owners that will be disadvantaged with this option.

However, Mr Key and Mr Brownlee have both stated that if people have issues over the accuracy of their ratings valuation then “further discussions can be held with us”. I will wait with interest as how these “discussions” will be handled.  Typically under a contestable rate-able valuation situation the owner can contend the valuation and submit independent valuation advice as evidence.

Click here to find YOUR Christchurch City Council Rating Value

 

2.  Separate Insurer + Land Buy Option: 

If you’re in the red zone you need to focus on getting to grips with ‘replacement value’ versus ‘indemnity value’.  Do not get off the phone from your loss adjustor  until you have a clear, plain English explanation as to what your policy covers – the goal is to firm up numbers to enable an accurate comparison in dollar values between replacement and indemnity.

Both options obviously need close attention, weighing up the alternatives dollar for dollar – values need to be accurate - only then will anyone be able to determine their best strategy…

 

Be sure to seek sound independent advice from your property valuer and your insurance agent.

As always I’m available for a chat about your unique situation

Good luck

Bevan Fleming
Director / Senior Registered Valuer

 

 

 

POSTED: 28 March 2011

 

“Hornby, the new Fendalton.”   Avenues Magazine, April 2011

Just read this quote in a local Christchurch magazine…a few months ago this idea would have been thought of as flippant - before September last year quite ridiculous…but since February 22, a date now etched in all Cantabs minds, it could actually be a considered proposition!?

The destruction caused by the big 6.3 has certainly turned our local property market on its head.

We are now living in a new Christchurch.  Personally I grieve for the old…but professionally I now need to try and understand new market dynamics:

  • previously sought-after suburbs now sit on active fault lines
  • large portions of the city now sit on liquefied sand
  • some very average price ‘safe’ areas may now be THE place to live!

To be honest these are just the first of many ongoing market adjustments...

I do believe though there is a risk of over complicating things.  The property market is always driven by uncertainties, sentiment, circumstance, fear, greed, confidence, panic and timing - post Feb 22 earthquake will be no different.

Unfortunately it will take time to see how the value trends and patterns emerge.  Of course for the impatient among us, like me, this is going to be very frustrating. 

The 2010 September quake had a significant impact on the market, but within a few months activity still ticked along for majority of the city. The second quake has been devastating and largely stopped the Christchurch housing market in its tracks!

Although large chunks of the property stock have been left relatively unscathed, with continuing aftershocks and a raft of ongoing questions including safety, liquefaction, insurance claims - market sentiment is now understandably extremely tentative.   With sales now at the lowest level ever recorded, a significant lack of market evidence makes it impossible to make any considered professional opinion on current price trends.

Professional valuation is based on up-to-date factual market evidence - none of which is available since our second quake.

However some clear post-quake value assumptions can be made: micro-markets (safe versus unsafe suburbs) will become more and more evident; building costs will certainly increase; rents will continue to rise, and we will see continued volatility. 

Christchurch housing market is currently in a holding pattern – waiting – and will be for some time depending on planning, government, budgetary and geotechnical decisions, migration trends and ultimately mother nature!

 

My apologies that these initial thoughts are more questions than answers...but I’m more than happy to talk through any property troubles you are trying to work through – particularly surrounding second opinions for insurance purposes – as they say, problem shared just might be a problem halved?

If you are in the middle of a transaction, or feel in a panic about the post-quake value of your home, please give me call - on so many levels it's good to talk...

 

Stay safe

Bevan Fleming
Director / Senior Registered Valuer

 

STOP:

GET A SECOND

OPINION!

Earthquake Insurance Advice:

"TC3 Green-Blue Zone"? 

Are you looking at potential demolition or rebuild of your home or rental property?

Do not sign any insurance pay-out agreements before getting your own professional, independent valuation advice!!

Essential Residential Insurance Post Quake Services:

  • Reinstatement Valuations - providing replacement costs of your building for insurance purposes
  • Indemnity Valuations - pre-earthquake (market value) valuations for insurance purposes i.e. depreciated replacement costs of your building as of the day before the quake
  • Sum Insured Valuations -  with the insurance industry's move to capped policies the onus is now on you the policy holder to nominate an adequate amount for replacement...we can help call us to arrange a professional 'reinstatement cost estimate'. 

... find out what our clients think...

Your house is your largest asset - make sure your insurance pay-out is fair - every $10,000 counts!

CALL TODAY TO DISCUSS - ask for our Director, Bevan Fleming - no obligation chat - phone 982 8258

Important Advice regarding "insurance transfer":

 There is now a new normal when buying and selling property in Christchurch - you need to ensure that insurance claims are 'transferred' and new policies available...

Sometimes it's not as simple as the sales agent might advocate!

This article is one we think worth reading before making any final committments:

The danger of indemnity.