– © Fairfax NZ News
Valuers says homes in the green-blue zones have been unfairly stigmatised, and panicked owners are selling too cheaply.
About 28,000 homes are in the Government’s TC3 green-blue zones, where a greater risk of liquefaction means new or rebuilt foundations will need to be stronger.
As owners and insurance companies wait for clarification of the new requirements, property professionals are wrestling with the latest market curveball.
Wilson Penman, head of the Canterbury-Westland branch of the Valuers Institute, said prices for homes sold in the green-blue zones had been “all over the place”, with modern, undamaged homes in demand but values in damaged areas adversely affected.
Penman said the categories had “very serious implications” for the values of houses, especially in dearer suburbs including Merivale, Fendalton, St Albans and Opawa.
“Some people haven’t got a clue and they think as long as it’s green, everyone is happy, while some people are desperate, they have just panicked and sold much too cheap. In the worst case we saw, the owners lost $150,000. As soon as you throw uncertainty in, you stymie the market.”
Brent and Corinne Wright have already knocked over $20,000 off the price of their sunny Parklands section and say they will discount it further if they have to.
The couple demolished their damaged house on the land and are rebuilding in Prebbleton, but have been left with two mortgages.
“There’s just been no interest,” Corinne Wright said. “We tried to list it with an agent but they said we would have to sell it $20,000 to $30,000 under GV to even budge it, and get a geotech report.”
Real estate agents say they are referring confused buyers to their lawyers for information.
“People thought the new zonings would offer solutions and now they’ve been taken back a step or two,” said Pip Nielsen, of Ray White Burnside.
Some green-blue owners had the added disadvantage of being surrounded by red zones, Nielsen said. “They are really stuck, and are wondering: `Who would buy our property if we want to sell’?”
Peter Griffioen, of Harcourts, has seen sales fall over because of green-blue zoning, which he called “a blight” and a “leprous label”. Some green-blue homes had sold for prices well over rating valuation due to competition, while in other cases buyers were staying clear.
“If I was choosing between a TC3 and TC2 house the same price, I’d personally go for the TC2. It’s a minefield, and there’s a lot of ignorance about it in the real estate industry.”
Griffioen said real estate agents were “frazzled, and in damage control”.
Penman urged care, as green-zone buyers might run into insurance caps or big excesses, or could strike trouble getting consents for future extensions or renovations.
He advised buyers to look for building damage and liquefaction, consult a valuer with local knowledge, and make contracts conditional on a geotechnical report.
“We’re seeing buyers just rushing in and putting a contract on the table. Do your homework – if you get it wrong, it’s wrong for a long time”.
He urged green-blue zone sellers to get a geotechnical report, which would “cost peanuts compared to the effect on the value of your home”.
“A lot of TC3 land will be fine, they have just done wide, broad-brush ratings.
“Earthquakes don’t follow streets the way the categories do and we’re convinced there’s quite a lot of TC2 in the TC3 zone.”
Fellow valuer Keith den Hollander said the classification, and reactions to it, were “a serious threat to the value of people’s biggest asset. People need to know what options they have, they need to know they can get some investigation done.”
A Cera spokeswoman said classifications could not be overturned with a favourable geotechnical report.
However, the information would be added to the local council’s LIM report on a property “and that’s what the Building Code goes by”.