By Neville Bennett
"Jim", my good neighbour has had enough and is moving to Australia.
I went round to see him today, and while we chatted several cars slowed, some stopped to gawp, and two presented themselves as potential buyers. My friend said he was hoping for a bit less than GV. The buyers retreated: their interest was in fire sales.
Jim thinks he may have to rent the house rather than sell it.
That sounds viable. It is a fine 2-story house, rimu weatherboard, slate roof, marvellous plain wooden floors, 4-5 bedrooms in a lovely, squarish, 1,000 square metre section with an excellent solar-heated-swimming pool. The earthquake damage was to the chimneys only. These rimu houses in my locality were built before building codes, but they are as tough as boots.
It is zoned residential but the other side of the block is commercial. I would imagine that, if the plan was changed, it would be eagerly sought as offices. As it is in the zone of the two best girls and boys state school - there could be a good rental demand from families.
Trouble is Jim needs the capital to buy in Queensland. His dilemma is to get a good rental or a fire-sale capital quantity - and convert that into Aussie dollars when the exchange rate is remarkably unfavourable.
I think Jim should sit it out but would not presume to tell him as the packers are coming tomorrow.
Should I do something similar?
My house is similar to Jim’s. His is better quality. My rimu house lacks the same street appeal and does not have a swimming pool (have you ever seen a teenager regularly service a pool?) but has similar amenities.
It was my biggest investment, and I always thought that when the kids left (they still come and go) I could subdivide and build a block of flats too.
My canny hairdresser reckons high grade flats for rich overseas students is the way to go. Finding rich overseas students might be a bit difficult now, and for sometime, although the University is barely damaged. The quake might have dented the perception of Christchurch as a safe city.
Safe as Houses
I did regard my house as a good investment. I bought it because I regard Riccarton as the best place to live. Within a radius of three blocks I can walk my dog to Hagley Park, Harakeke Park and Riccarton Bush. The Mall is three blocks away. Every service is adjacent but I think I will be locked in for a long time until the market operates again.
The earthquakes have broken a bearer across the piles in my house. The effect is hardly noticeable except the floor in the dining room is uneven, and there are faint cracks in the walls. But Fletcher’s have surveyed the house and said it would be best if we briefly evacuated the house while the repairs were being done. We do not have a date but have started sorting stuff.
We thought we might take some to a relative’s, but the insurance company declined as the relative lacks an alarm. I imagine that buyers would not want a house in which builders might come in for a week, sometime in the years ahead.
In the longer run, I expect my locality to maintain a good premium over other areas. It is in the West; liquefaction is very localised to stream-sides and until the quake, and it was the most progressive part of the city. Peak oil will enhance its appeal for it has excellent bus services and is hub for cycles.
But will Christchurch recover? There has been a mass exodus and many say they will never return.
Much will depend on the quakes. If they recede, confidence will return.
But I am not confident that another big one will not occur. We do not have the knowledge of the subsurface that miners and drillers can provide. It would not be wise to rebuild until we have better geological information.
Christchurch will recover.
There is a massive investment in infrastructure and facilities like the port, airport, hospitals, the University, commercial, industrial and housing stock. It has real functions of servicing its huge, thriving hinterland. But it will take a long time to regain its 2011 output.
I think the central area should be rebuilt on sustainable principles: low rise buildings, often around squares with grass and trees in the centre, separate bike routes and very pedestrian friendly. It would remain a business and administrative centre, with top-end retail, and excellent cafes.
It would still attract tourist and language students. I would make the cathedral safe, but not restore it. Our energy should go into a new vibrant city.
I am lucky that my house has suffered little damage but I have no way of valuing it as the market has collapsed.
How safe are houses?
* Neville Bennett was a long-time Senior Lecturer in History at the University of Canterbury, where he taught since 1971. His focus is economic history and markets. He is also a columnist for the NBR.