Residential Market Overview
NICK COWDY / Residential Sales Consultant, Principal Agent
2022 has been a highly interesting year for real estate. Here in the Garden City we have seen a reduction in sales volumes, but an increase in the median price compared with 2021. Stock levels have increased back to ‘normal’ levels, which is a sign of supply and demand becoming relatively evenly matched.
The Reserve Bank’s fight against inflation has had the biggest impact on the market. While interest rates are still historically low, the shock and pain is real for homeowners who had become accustomed to interest rates in the 2-3% range. The Reserve Bank has pulled other levers to restrict buyers who do not have a 20% deposit, effectively making them unable to bid at auction without additional valuations. Unsurprisingly, the companies which blindly insist that auction is the best method of sale are not seeing great success rates.
While the media continues to peddle doom and gloom, Christchurch appears stable on the nationwide stage. As an independent, experienced, and nimble agency, we are taking advantage of our abilities and delivering some exceptional results in what is undoubtedly a more difficult market.
There is a reason we have been a market leading independent agency for decades, and we look forward to many more.
Te Kaha (Christchurch Arena)
Work has finally started on Te Kaha, Christchurch’s exciting new 30,000 seat multi-use arena. The 6.8 hectare block between Madras, Barbadoes, Hereford and Tuam Streets will get busier as headway is made in the early phase of the project. Ground improvement, piles and major excavation works are being carried out across the site, with the ground preparation work due to be finished by the end of year when the main construction will begin.
If the project progresses according to schedule, it should take about four years to complete, which is a similar timeframe to the recently opened Te Pae Convention Centre (although this was partly due to Covid-related disruptions).
Intended to attract international as well as national events, big concerts and sports matches, the state-of-the-art arena will be covered with a lightweight ETFE glass-alternative roof for year-round enjoyment. It is also being constructed with high-quality acoustic performance for concerts.
Te Kaha is the largest project Christchurch City Council has ever undertaken, with the budget coming in at $683 million (including $220 million in central government funding). The preliminary design report was confirmed in August and full details are available on the Christchurch City Council website, including images of what the arena will look like and how it will fit into our cityscape.
Loan Market Finance Update
RODNEY KING & STACI BURNETT / Mortgage Advisors, Loan Market
Mortgage challenges: don’t give up, have a plan
There is a lot of noise in the media at present about the challenges homebuyers are facing. Interest rates are expected to continue increasing, bank criteria are harder to meet and house prices are falling in some localities. There are also differing views on whether now is the perfect time to buy, or if waiting is the right choice. It can all get a bit much when you are listening to the dismal media clickbait.
Despite the current challenges we continue to help our clients secure mortgage lending, competitive interest rates and cash back, while securing properties that suit their requirements. Many of our customers are taking the opportunity to buy now and lock in today’s interest rates. This is a smarter option than waiting for a fall in prices that may or may not happen. Waiting could mean interest rates climb more than 1% higher than current rates, so your mortgage will cost more and obtaining finance will become harder. As interest rates rise, the maximum sum a bank will lend you decreases; hence your maximum position is likely to be stronger right now than it will be in six months’ time.
The key is having a plan. If you cannot buy the house you want today, what needs to change in order to be able to do so? We see many situations where people have all but given up before coming to us. Maybe their bank has said no, or they were not pre-approved to the price level they wanted. We are regularly securing better mortgage approvals for clients in these situations, or at least coming up with a plan to achieve lending approval in 3-6 months’ time.
When interest rates were between 2% and 3% there was limited variance between the banks, however with rates now between 5.8% and 7.3%, we are seeing much more competitiveness in both pricing (interest rates and cash back) and actual bank policies. Engaging a mortgage adviser from the start will help you secure the optimum option, with the best possible approval amounts, with some great advice and support along the way.
Why Use a Property Manager?
JANICE COWDY / Director
Handling tenant relations on your behalf
Approaching tenants about issues such as late rent payments and breaches of tenancy rules can be awkward for owners. Property managers deal with tenants on your behalf, meaning you won’t need to listen to excuses, chase payments or, in a worst-case scenario, go through a stressful eviction process.
Saving time
Lease terminations can be a real hassle for landlords; having to find time for the end of tenancy inspection, advertising the property, holding viewings, interviewing, checking references and credit ratings, deciding on the successful tenant, communicating with applicants, preparing legal documentation and conducting the ingoing inspection. Having a professional property manager handle the process for you can free up hours of your time. In addition, if a tenancy doesn’t work out, a property manager can manage the tribunal process, which can take up to 35 hours from start to finish. Even experienced landlords find that property managers remove a lot of stress from owning investment property, enabling them to enjoy the income without the hassles.
Up to date knowledge and experience
Residential tenancies have been subject to extensive legislative overhaul in recent years, with many landlords struggling to keep up with the latest regulations. Even the most careful, well-meaning landlords can unwittingly break the rules. A good property manager will be well versed and experienced in current legislation, as well as keeping thorough records and evidence which can help landlords avoid becoming liable for exemplary damages which are a financial penalty of up to $6,500 per breach.
Earning more money from your investment
A common misconception is that property management is a cost, when in fact it can be highly effective in increasing your income. Approximately 80% of self-managed rental properties are rented below the current market level. When marketing a rental property to prospective tenants, a property manager can help achieve a higher rent by employing effective techniques that are in tune with the current market.
Regular scheduled inspections
For many self-managing landlords, doing routine inspections can be daunting and feel like an invasion of tenants’ privacy. Approaching tenants about any damage caused can also be awkward. Insurance companies generally require at least three to four inspections every year and if a claim is lodged, they will often ask for full detailed written inspection reports, including photos, for each inspection. They will also ask for details of the reference checks that were done during the selection process. Property managers keep thorough records for the duration of the tenancy, ensuring all bases are covered in the event of an insurance claim. Property managers also carry out routine detailed inspections as a matter of course; paying particular attention to any health and safety matters, hazards, suggested improvements, maintenance and regulatory compliance, as well as taking appropriate follow-up action if required.
Christchurch Water Usage
Following changes introduced on 1 October 2022, Christchurch City Council will now charge households for water consumption above a set daily allocation.
Households using more than 700 litres a day (roughly equivalent to 100 toilet flushes) as measured by their water meter will be charged $1.35 per 1,000 litres of additional use, invoiced to the property owner.
CCC reads households’ water meters and will invoice for any excess water use on a quarterly basis, although bills are only be payable if they exceed $25. The first bills will be sent out in the first quarter of 2023. The ‘Water Reporter’ page on the CCC website provides a search function where you can check your household’s water usage.
Under the Residential Tenancies Act, all fixed water charges, rates and insurance premiums are payable by the landlord. However, any additional water charges which are incurred based on the tenant’s water usage will be the responsibility of the tenant, unless the tenancy agreement states otherwise.
In practice this means that if you are a landlord it is still your responsibility to pay the invoice up front, even if an excess water usage bill is recoverable from the tenant. Once you have paid the bill, you can request reimbursement from your tenant.
If one or more properties share a water meter, which is common for cross leased and unit titled properties, it is not possible for CCC to attribute water usage to your specific property. Because of this, until a separate water meter is installed solely for your property, you will not receive any charges for excess water usage.
Remissions are available in certain circumstances (for example medical needs or large households) and can be applied for via an online form on the CCC website.
RMA Overhaul
The Government has promised a cheaper and quicker process for obtaining building consent as it overhauls New Zealand’s outdated and “broken” Resource Management Act (RMA).
The RMA is New Zealand’s principal piece of legislation governing natural resources like air, soil, freshwater and coastal marine areas. It also regulates land use and the provision of infrastructure. Interacting with 17 other pieces of legislation, it is both complicated and important.
Environment Minister, David Parker, has said changes to the RMA will improve housing supply, make houses more affordable and give buyers more choices.
“The current system is broken. It takes too long, costs too much and has not adequately provided for development nor protected the environment,” Parker said. “It needs to be faster, cheaper and better. We are doing that, delivering a system that provides greater certainty and simplicity.”
The government estimated the changes will save $149 million a year in consenting costs.
“More than 20 major amendments and thousands of minor ones since the RMA was introduced have only increased complexity,” Parker said. “Everyone is frustrated – environmentalists, developers, councils, farmers, home builders and there’s cross-party support for the need to repeal and replace the RMA.”
The changes set to come in are:
- A new consenting system to make the process quicker by standardising several aspects
- 100 existing RMA plans reduced to 15 regional plans for simplicity
- More environmental protection for land and resources.
The new system was introduced in Parliament on 15 November 2022 as the Natural and Built Environment Bill and the Spatial Planning Bill. Both are now at the first reading stage, which involves MPs debating and voting on the bills. The reform’s third section, the Climate Adaptation Act, will be introduced at a later date.
The Performing Arts Precinct
One of the many exciting anchor projects underway in Christchurch’s city centre is the Performing Arts Precinct, which will offer premium facilities for music, theatre, dance and other performing arts.
The Performing Arts Precinct will occupy the block bound by Armagh, Gloucester, Colombo and New Regent Streets, already home to the Isaac Theatre Royal and The Piano Centre for Music and the Arts.
Christchurch City Council is working in partnership with the Court Theatre, which was forced out of its original home in the Arts Centre after the February 2011 earthquake, to build a leading edge new facility in the Performing Arts Precinct. Construction of the new theatre building is expected to begin before the end of this year on the corner site at the intersection of Colombo and Gloucester Streets, with doors expected to open in 2024.
Once completed, the new theatre will include a 360-seat main auditorium, a 130-seat studio theatre for children’s and family shows, and front-of-house facilities. All aspects of the theatre company’s operations will be based on site, with plans to make backstage activities such as set-building, costume-making and rehearsals more visible to the public.
CCC is committing $30 million, set aside in its Long-Term Plan 2018-2028, towards the development of the Performing Arts Precinct, including the construction of The Court Theatre, public spaces and landscaping. The Court Theatre is also fundraising $10 million towards the project.
Rental Market Update
JANICE COWDY / Director
The national median rent for residential properties increased by $40 a week in the 12 months to September 2022, representing annual growth of 8%, according to bond data from Tenancy Services.
A majority of the bonds Tenancy Services receives are for new tenancies. New tenancies set the market rate which existing tenancies are adjusted to as they come up for rent review. This makes the figures from Tenancy Services a reliable indicator of rental movements. It is however important to know that to accurately appraise a property there are a combination of resources that need to be considered, especially as the data on Tenancy Services is for the previous months. By looking at similar properties that are or have recently been advertised and properties within our own portfolio, we are able to determine the best rent for your property.
Some substantial regional variations can be seen in these latest figures, suggesting big differences in the availability of rental housing in different parts of the country. A notable feature of the latest figures is the very weak rental growth in the country’s largest city, Auckland.
The range in rental increases across the country over the year to September varied from zero in Taupō, where the median rent was unchanged, to a 17.9% increase in Masterton. Invercargill, Timaru, and Ashburton were in a three-way tie for the cheapest median rents in the country at $400 per week, while the highest median rent in the country was $650 per week in Porirua.
At $450 per week, Christchurch City is sitting almost in line with the national median, increasing by $35 a week in the 12 months to September – an increase of 8.1%.
What’s On in Christchurch this Summer?
There are several exciting events planned in Christchurch this summer. We’ve curated a few of the highlights to add to your calendar:
SCAPE Public Art Season
SCAPE Public Art Season is a highlight on Christchurch’s cultural calendar, bringing work from eight local and international artists to the streets of Christchurch central city for the public to enjoy from 5 November 2022 to 29 January 2023. Several new and exciting artworks will be enhancing our city centre for the duration of the season. The line up features renowned artists including Hye Rim Lee, Wendelien Bakker, Scott Flanagan, Jon Jeet, Pacific Sisters, Eddie Clemens, Young-Hae Chang Heavy Industries and Dr Jo Burzynska, who have created a range of inspiring, thought-provoking and playful works.
New Years Eve
North Hagley Park will be transformed for a New Year’s Eve celebration, featuring Australasian music icons Dragon among other performers and family entertainment. The event, NYE22, is set to start with interactive fun for the whole family, including a kids’ countdown before the main show kicks off. There will be a range of food trucks and a huge fireworks display taking place at midnight.
Summer Sundays
Organised by Christchurch City Council, Summer Sundays returns this summer with four free concerts across four weeks, featuring jazz, rock, country and dub. All four concerts will be held on the Archery Lawn at the Christchurch Botanic Gardens, with visitors welcome to bring picnic food, drinks and chairs. More information including show dates and times is on the CCC website.
Bread & Circus – World Buskers Festival
Mind-blowing days and magic nights are promised as Bread & Circus returns to the streets of Christchurch for the World Buskers Festival’s 30th anniversary. The 2023 festival will run from 13-29 January, across three weekends and the summer school holidays in the heart of the city. The world-famous busking pitches, free outdoor spectacles and must-see ticketed events are all set to return, with festival organisers promising something for everyone.
Cricket vs Rugby
For sport fans, the best sporting event of the summer is set to take place on Friday 20 January. New Zealand’s biggest stars of rugby and cricket will be pitted against each other in a high-intensity T20 cricket match at Hagley Oval.
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