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A decade on from the earthquakes, homeowners disillusioned by prolonged negotiations with EQC and insurance companies are reverting to selling their properties on an ‘as is, where is’ basis.
The recent sale of a Fendalton property at auction for $2.4 million – more than $600,000 above its rateable value – illustrated the niche market within a burgeoning industry.
Bidding by six prospective buyers had opened at $1.8 million. The previous owners purchased the 2100sq m property in 1994 for $542,000 to build a contemporary architectural house.
“There’s a huge amount of people who hadn’t settled (with EQC/insurers) but there’s also a lot of people who had repairs done of some nature but significant damage wasn’t picked up – that’s one of the biggest drivers (to sell as is, where is),” Ellis said.
“This particular one … they’d done all the repairs, they’d taken the cash settlement and done significant cosmetic repairs but the levels of the house were never taken, which is pretty staggering.
“Levels were (subsequently) taken by a building inspector and they were out by a mile. They had to go back, re-open the claim and renegotiate.
“A lot of people are just so over the process. The mathematics often works out that you’re going to get as much money or sometimes more by taking the cash settlement and selling on an ‘as is, where is’ basis,” Ellis said.
“It’s still happening in significant numbers. There are still easily 10 a month for sale, at price points anywhere between $500,000 and $3 million.
“There’s a lot of people out there with a lot of expertise who have done a lot of repairs, a lot of builders and developers who look at those properties and see an upside for them to buy ‘as is’.
Ellis cited the example of a “run down”property in Waiwetu St, Fendalton, which sold recently for $2.8 million.
“They were going to bowl the house and build a brand new home. It’ll be a six or seven million dollar home by the time they finish it,” he said.
Simon Hunter, from the aptly named asiswhereis.co.nz estimates the company has completed 100 transactions over the last five years.
“Unfortunately, you’ve got a lot of people still fighting over their payouts with insurance companies.
“You get some people at the end of their tether. For some people it’s really affected their lives, which is quite sad really.”
Hunter said the company did not bid at auctions, instead relying on referrals for new business before dealing with each property on a case-by-case basis.
“I’m only just starting my first new development. We’ve always been a firm believer that if we can save the house we’ll do that. We hold a lot of our stuff and turn it into affordable rentals,” he said.
Elliott Street from Iron Bridge Property Group said there was always strong interest in earthquake-damaged properties when they hit the market.
"Since the earthquakes the volume of suitable properties has slowed down. There has been increased interest in "as is where is" properties in higher density zoning," he said.
"This creates opportunity post-quake for properties that had very little value before."
Street was not surprised the sale of earthquake-damaged properties is still prevalent a decade on from the natural disaster.
"I think it is such a unique environment that Christchurch sits in post-quake. There were so many unknowns from land zoning, insurance issues ... Some people are determined to get it done through insurance so continue to persist. It's a tough one as to many people those properties, pre-quake, were their own homes.
"Overall it is clear to see that many people do just want to move on especially when there are buyers. Some are harder to sell than others, depending on their issues, but the change in the district scheme around land zoning has helped many achieve the results they wanted," Street said.
Real Estate Institute of New Zealand chief executive Jen Baird was relaxed about the involvement of repair companies in the market.
“At face value this seems positive, as it gives homeowners who are unable or unwilling to get their homes up to standard, an opportunity to sell up and find something that they can get insurance for and hopefully feel a bit safer,” she said.
“Because there are a number of repair companies doing this and sales are being made on the open market, sellers are likely to receive offers that reflect market value.
“More than 10 years on from the Christchurch earthquakes, it is a shame to see so many property owners still struggling to get their properties EQC compliant,” she added.