Christchurch housing : ‘If you build the right thing, buyers will still come’

Will they ? How many, how far ?
(if there’s nothing more than service sector jobs available)….

Hmm. In their early contributions to What if? Dunedin, Lee Vandervis and Christchurch Driver [CD] each had the measure of the post-quake new build housing market in Christchurch. Cycling boom and bust, with odd and unexplained connections and financing.

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Link received.
Sat, 4 Mar 2017 at 12:31 p.m.

T H E ● P R E S S

Christchurch’s rental market is oversupplied and freshly-built terraced houses are sitting empty and unsold in the suburbs. How did the city with the real estate market decimated by the earthquakes get here?

According to the Ministry of Business, Innovation and Employment (MBIE), the average rent in Christchurch is falling for the first time since records started in 1993.

### Stuff.co.nz Last updated 18:11, March 3 2017
Christchurch’s housing paradox – the downside of a building boom
By Michael Wright – The Press
Last month, Mike Blackburn bought a house. He and his wife looked at about 40 properties before settling on one. As they traipsed through the preceding 39, a pattern emerged. “Every second house we looked at was empty,” he said. “That’s just a telling figure. Where have all these people gone?” The significance of what he saw wasn’t lost: Christchurch, the city once desperately short of houses after thousands of them were wrecked by earthquakes, had a lot more accommodation than it used to.

Blackburn is a management consultant, specialising in construction clients. When small or medium-sized operators are struggling, they go to someone like him for advice on how to get through. As part of his work, he gets the raw consenting data from the Christchurch City Council each month – location, builder, value, type of consent (earthquake or business as usual), intended use – to build a picture of the marketplace. He saw a clear vision. “There was a major rush, mostly by the group home builders, to build a lot of houses really quickly,” he said. “What’s happened is now everyone who’s needed a house has pretty much got one and they’re still building them. They’re building them flat out . . . all these development companies are month after month submitting 20-30 consents each for essentially spec housing.” The numbers have tapered off of late. The council peaked in 2014 at more than 3200 consents issued – about 270 a month – before drifting back down to just over 2100 last year. 2017 is already tracking below that. As Blackburn sees it, though, the damage has already been done. “There will be a correction. The number of buildings and the total number of dwellings being built will fall off really rapidly. It’ll go below that business as usual level, because we’ve got a major oversupply at the moment. Potentially that effect could run on for the building sector in Canterbury for the next two, maybe three years.”

….Anecdotally, rental properties are in such abundance landlords are dropping prices and offering incentives to secure tenants. This week, Stuff reported on swathes of empty multi-unit houses languishing in suburban subdivisions. “[We] certainly won’t be building any more of those,” construction boss Mike Greer said at the time. Then there is the data. Compare Government valuer QV’s latest monthly average house values for each region against last February and Christchurch does not do well. QV measures the city in six disparate parts and they all appear in the bottom 11 spots for value increase [three of the other five are the Selwyn, Waimakariri and Ashburton districts]. Rises in the Christchurch zones range from 0.7 per cent [east] to 3.9 per cent [southwest], which barely registers against most of the rest of the country; basking in double-digit growth all the way up to an eye-watering 29.5 per cent jump in the Queenstown-Lakes district [average house value $1,039,434].

Market forces were …. promoting even more building. The Reserve Bank’s loan-to-value ratio (LVR) restrictions on banks lending to home buyers exempted new builds. A home buyer generally needed a 20 per cent deposit, but a home builder could get finance with much less. Christchurch, in the middle of an insurance-driven building bonanza, didn’t need that kind of encouragement.

“People have gone, in my mind, somewhat berserk in building new, to try and fill that [housing] void,” Canterbury Registered Master Builders president Ivan Stanicich said. “Some of the bigger building companies in Christchurch grew exponentially, hired more and more people and that was only ever going to be for about a three-year sweep. Now we’re seeing the reverse of that where building companies are actively downsizing. That’s well known in our industry. Nobody wants to shout that from the rooftops, because it’s not a positive business outlook, but it’s quite understandable. If you don’t, any gains you’ve made through the building boom, they’re just going to be lost in your overheads.”

Property manager Tony Brazier saw the problem coming. In October 2014 he penned a column in The Press warning of the dangers of over-building. “The housing rebuild must be carefully monitored so we do not end up over-supplied,” he wrote. “This phenomenal house building pace should alert us to the fact that, whereas in the past it takes only a few builders struggling to sell their new-builds to signal an end to the cycle, this time could be different. It may take large contractors not being able to sell whole subdivisions before the message gets through.”

….How did it come to this? The first answer is earthquake insurance money finally caught up with, and overtook, the market. As Stanicich said – builders going berserk trying to fill the housing void. In the meantime, claims were settled and damaged stock repaired. An unforeseen element of this was the brisk trade in as-is, where-is houses – earthquake casualties that were uninsurable but livable. Landlords snapped them up and, in a stressed rental market, had no problem finding tenants. The by-product was Christchurch’s housing stock ended up not quite as depleted as first thought.
Read more + Charts

Recent Press articles:
Christchurch’s terraced homes struggling to sell as housing market levels
Christchurch landlords lower rents due to ‘oversupply’ of properties
Cash and rent-free offers fail to lure tenants as Christchurch housing….
City’s rental crisis ‘at breaking point’

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█ Thoughts immediately turn to Dunedin City Council and DCHL’s commitment as of 1 August 2016 to the new Delta ‘joint venture’ (including the Noble types) at Yaldhurst. After all the legal stoush, will properties sell ?

[Gurglars] Hoarding at Yaldhurst subdivision, 14 February 2017

[Christchurch Driver] Yaldhurst subdivision, 13 February 2016

[Christchurch Driver] Yaldhurst subdivision, 21 January 2016

[villagelife.co.nz]

[realestate.co.nz] Yaldhurst Village Mortgagee Tender, 15 December 2015

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BACK WHEN (2014), Mike Greer Homes NZ ramped up production to rehouse people in post-quake Christchurch, it was a genuine and concerted effort:

Where there was bare land a year ago, a factory now stands ready to reshape the residential construction industry.

### Stuff.co.nz Last updated 05:00, November 22 2014
House factory ready to roll
By Alan Wood – The Press
As Mike Greer and Bill Gee watch the emergence of their “high volume” residential panels factory, they have no concern they will contribute to an oversupply of new homes. The $14 million industrial factory development includes $5m plus of specialist German machinery to be used to rapidly construct the panels for residential homes. Greer, “a chippie by trade”, is optimistic about the Rolleston-based factory’s place in a Canterbury and Auckland building boom. “This is fantastic for the residential construction industry. No-one in New Zealand has ever seen anything like this,” he says of the joint venture company Concision, which he and Gee own. Asked about any slowdown in the Canterbury rebuild and residential market, Greer says he has hundreds of pre-sold homes he is yet to make a start on.
Is there any danger of an overbuild by builders in the region?
“Well wouldn’t that be good. Everyone is complaining about housing affordability. The only way to fix that is supply,” Greer responds. He says there are signs interest rates have stabilised and may even come down. From April 1, a Government subsidy on first home buyers of new homes in Canterbury will be introduced. A buyer could get up to $20,000 towards a $450,000 home. “So that’s really going to stimulate things at that end of the market,” Greer says. The Reserve Bank was also signalling that eventually . . . it will remove loan to value ratio restrictions that have made it more difficult for first home buyers to get loans.
Read more

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Related Posts and Comments:
● 17.2.17 Gurglars visits the Delta/Noble JV subdivision at Yaldhurst
● 11.3.16 Delta peripheral #EpicFail : Stonewood Homes and ancient Delta….
● 10.3.16 Noble Subdivision next on the shopping list !!! You couldn’t….
6.3.16 Delta #EpicFail —Noble Subdivision : Tea & Taxing Questions
6.3.16 Delta #EpicFail —Nobel Subdivision : A Neighbour responds
5.3.16 Delta #EpicFail —Noble Subdivision —Epic Fraud
4.3.16 Delta —Noble Subdivision #EpicStorm Heading OUR WAY
4.3.16 Delta #EpicFail Noble Subdivision : Councillors know NOTHING
2.3.16 Delta #EpicFail Noble Subdivision : A Dog, or a RAVING YAPPER?….
1.3.16 Delta #EpicFail… —The Little Finance Company that did (Delta).
29.2.16 Delta #EpicFail Noble Subdivision : NBR interested in bidders
28.2.16 Delta #EpicFail Noble… If I were a rich man / Delta Director
27.2.16 Delta #EpicFail Noble Subdivision Consent : Strictly Optional
27.2.16 Delta #NUCLEAR EpicFail —Noble Subdivision : Incompetent…
25.2.16 Delta #EpicFail: Mayor Cull —Forced Sale Fundamentals 101
24.2.16 Delta #EpicFail —Noble Subdivision : Cameron, Crombie & McKenzie
23.2.16 DCC: DCHL half year result to 31 December 2015
19.2.16 Delta: Update on Yaldhurst subdivision debt recovery
15.2.16 Delta / DCHL not broadcasting position on subdivision mortgagee tender
30.1.16 DCC Rates: LOCAL CONTEXT not Stats —Delta and Hippopotamuses
29.1.16 Delta #EpicFail —Yaldhurst Subdivision ● Some forensics
21.1.16 Delta #EpicFail —Yaldhurst Subdivision
21.1.16 DCC LTAP 2016/17 budget discussion #ultrahelpfulhints
19.1.15 Housing affordability in this country is “just hopeless” –Hugh Pavletich
10.1.16 Infrastructure ‘open to facile misinterpretation’…. or local ignore
15.12.15 Noble property subdivision aka Yaldhurst Village | Mortgagee Tender
21.9.15 DCC: Not shite (?) hitting the fan but DVL
20.7.15 Noble property subdivision —DELTA #LGOIMA
● 1.4.15 Christchurch subdivisions: Heat gone?
24.3.15 Noble property subdivision —DELTA
23.3.15 Noble property subdivision: “Denials suggest that we have not learned.”
17.3.15 DCC —Delta, Jacks Point Luggate II…. Noble property subdivision

● 14.5.14 (via DCC website) Larsen Report February 2012
A recent governance review of the Dunedin City Council companies was conducted by Warren Larsen.

● 20.3.14 Delta: Report from Office of the Auditor-General
Inquiry into property investments by Delta Utility Services Limited at Luggate and Jacks Point

█ For more, enter the term *delta* in the search box at right.

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Posted by Elizabeth Kerr

This post is offered in the public interest.

DCHL —Which ‘Infinity’ were Councillors sold on #funnybusiness

ODT 13.10.16 (page 12)

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The published reply has no direct bearing on Russell Garbutt’s enquiry.

● INFINITY YALDHURST LIMITED (5886102)
Incorporation Date: 09 Feb 2016
Address for service:
Jackson Valentine Limited, Level 3, 258 Stuart Street, Dunedin 9016
http://www.companies.govt.nz/co/5886102

● INFINITY INVESTMENT GROUP HOLDINGS LIMITED (1004601)
Incorporation Date: 06 Dec 1999
Address for service:
Jackson Valentine Limited, Level 3, 258 Stuart Street, Dunedin 9016
http://www.companies.govt.nz/co/1004601

● INFINITY FINANCE AND MORTGAGE LIMITED (5920307)
Incorporation Date: 17 Mar 2016
Address for service:
Infinity Finance and Mortgage Limited, 12a Fovant Street, Russley, Christchurch 8042
http://www.companies.govt.nz/co/5920307

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Related Post and Comments:
22.9.16 DCC : Delta deal 1 Aug 2016 Council meeting (non-public) #LGOIMA

█ For more, enter the term *delta*, *dchl*, *infinity*, *noble* or *epic fraud* in the search box at right.

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Posted by Elizabeth Kerr

This post is offered in the public interest.

Carisbrook: DCC losses

Dunedin City Council – Media Release

Carisbrook documents released

This item was published on 03 Jul 2013.

A large number of documents relating to the purchase and subsequent sale of Carisbrook have been released publicly today.

These can be found at www.dunedin.govt.nz/carisbrook-documents

The DCC bought the sportsground, surrounding houses and some vacant land from the Otago Rugby Football Union for $7 million in 2009. With the sale of Carisbrook confirmed last week, all the properties have been sold.

Contact DCC on 477 4000.

DCC Link

### ch9.co.nz July 3, 2013 – 6:35pm
Carisbrook sale costs city $2.3 million
The Dunedin City Council’s purchase, then sale of Carisbrook, has cost the city $2.3 million. But that figure, confirmed at a media conference today, is not the only drain on ratepayers. And while the release of costs ends a controversial era for the city, the vagaries of commerce, rather than the decisions of politicians, were blamed in the wash-up.
Video

### 3news.co.nz Wed, 03 Jul 2013 6:11p.m.
Ratepayers question Carisbrook sale
By Brooke Gardiner
Dunedin’s Carisbrook Stadium has been sold for $3.3 million, which is less than half what the Dunedin City Council paid when it bought the place three years ago. Construction company Calder Stewart bought the former sports ground for almost $4 million less than the council forked out to the Otago Rugby Football Union in 2009. And it could be three years before the council sees any money. The deal went unconditional last month, but the council’s only just released the finer details of the agreement.

“They have three and a half years to pay for it. We’re leaving the finance in and they’re paying us 5.5 percent on that money.”

Ruing the loss of ratepayer funds, Mayor Dave Cull says they should never have bought the stadium. “I opposed it at the time. I don’t think we should have bought it. I think we were buying it for the wrong reasons, but the choice over whether to buy it or not was not this council’s,” says Mr Cull.
Read more + Video

### ODT Online Wed, 3 Jul 2013
DCC confirms $2.3m Carisbrook loss
By Chris Morris
The Dunedin City Council has confirmed a $2.3 million loss from the sale of Carisbrook, and revealed a complicated financial arrangement with the new owner. Mayor Dave Cull, at a media conference this afternoon, confirmed the council would recoup $4.7 million of the $7 million it paid for the historic sports stadium in 2009. However, Calder Stewart, the company that bought the ground off the council, had only been prepared to pay $3 million up front, Mr Cull confirmed. Instead, a deal had been struck that meant the company would pay at least $3.3 million, but deferred for up to three years, with payments made as the ground was subdivided and sold by Calder Stewart, he said. The sum paid would rise to $3.5 million if demolition was not completed within six months, meaning the council would keep a $200,000 bond paid by the company, Mr Cull said. The deal would also see the company make up any difference at the end of three years, meaning the council was guaranteed its money, he said.
Read more

● Full report in the ODT tomorrow

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Related Posts and Comments:
27.6.13 State of the City —DCC or Dunedin?
28.5.13 Carisbrook: Auditor-General #fails Dunedin residents and ratepayers
23.5.13 Carisbrook: Calder Stewart to demo Dunedin’s historic stadium
20.3.13 Carisbrook: Shifting explanations for DCC $7m spend
6.3.13 Carisbrook: Cr Vandervis elaborates
6.3.13 Carisbrook: Question obfuscating mayor and council #rugby
20.2.13 Carisbrook: DScene suggests joint venture Calder Stewart / DCC

● List of Carisbrook posts back to 19 August 2008 [comment]

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Posted by Elizabeth Kerr

*Images: Ch39 Dunedin News (3.7.13) – Paul Orders, Robert Clark, Dave Cull [screenshots]

Carisbrook: Calder Stewart to demo Dunedin’s historic stadium

### stuff.co.nz Last updated 05:00 22/05/2013
Carisbrook ground demolition plans under way
By Wilma McCorkindale – D Scene
Plans are afoot to demolish Dunedin’s historic rugby ground, Carisbrook, tender documents show. The company that has signed up to buy Carisbrook – Otago construction company Calder Stewart – has issued tender documents inviting demolition companies to register their interest in clearing the site this year. Calder Stewart co-managing director Peter Stewart declined to confirm the tender or give details. The company was still under a conditional contract for Carisbrook with the Dunedin City Council, therefore he would not comment on the project, Stewart said.
Read more

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### ODT Online Thu, 23 May 2013
Plans to demolish Carisbrook
By Chris Morris
Calder Stewart has plans to demolish almost all of Carisbrook. The company bought the old stadium from the Dunedin City Council in a conditional deal in February for $3.3 million. Confirmation of the purchase appears to be due next month. Documents released to the Otago Daily Times yesterday confirmed the company planned to clear almost every structure from the former home of Otago rugby for future development.

The consent documentation also showed the demolition work was expected to cost the company $350,000.

Only the Neville St turnstile building would be spared, at least for now, as the Dunedin City Council and the New Zealand Historic Places Trust continue to discuss a covenant to protect the category one-listed structure. However, the Speight’s, Neville St, Rose and Railway stands would be demolished, as would the terrace hospitality complex, built for $4 million in 1994.
The details were spelled out in two building consents issued by council staff to Calder Stewart last month, and released to the ODT yesterday.
Read more

Related Post and Comments:
20.2.13 Carisbrook: DScene suggests joint venture Calder Stewart / DCC

For more, enter “carisbrook” in the search box at right.

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Posted by Elizabeth Kerr

Images (from top):
Carisbrook Stadium, two models by totara (sketchup.google.com)
Rugby at Carisbrook (3news.co.nz)
Carisbrook seating plan (ticketseating.com)
Carisbrook, Neville St turnstile building (historic.org.nz) [Jonathan Howard]
Carisbrook (teara.govt.nz) [file: p-22728-odt]

Carisbrook: DScene suggests joint venture Calder Stewart / DCC

Register to read DScene online at http://fairfaxmedia.newspaperdirect.com/

### DScene 20.2.13
End of the line? (page 1)
The famed Carisbrook sports ground has found a buyer, but the deal seems unlikely to derail criticism of the sale process. See page 3.

Mayor won’t confirm or deny details of sale (page 3)
By Wilma McCorkindale
Dunedin Mayor Dave Cull will neither confirm or deny the possibility the city has made a deal in lieu of an immediate cash sale for Carisbrook. Cull said he could not comment on reports a joint venture between the Dunedin City Council (DCC) and construction company Calder Stewart is incorporated into a deal for the sale of Carisbrook – the sale of which was announced a week ago.

‘‘I can’t confirm or deny the detail,’’ Cull said. ‘‘There are details in there but as far as I’m concerned it’s a sale. Many sales of property have conditions and this one is no different from that. ‘‘What I’m saying is I can’t divulge those because they are commercially sensitive at the moment, confidential. As far as I’m concerned in the big wash-up this is a sale of that property to Calder Stewart.’’

Two critics of Dunedin City Council have this week laid formal complaints to the Office of the Auditor-General and asked it to incorporate the Carisbrook sale into its current investigation of council-related property deals.

DScene asked Cull if Calder Stewart was paying for the ground upfront in cash once the sale went through. ‘‘I didn’t say that,’’ he said. ‘‘I just said it’s a sale to Calder Stewart. The details of how they pay for it are part of the confidential part of the details. I can’t comment on that.’’
{continues} #bookmark

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Editorial: Council secrecy creates bad blood (page 8)
By Mike Houlahan
Announcing a conditional sale to an anonymous buyer for an undisclosed amount was never going to be a sustainable position.
{continues} #bookmark

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Posted by Elizabeth Kerr