Attempting to get a foot on this scorching hot, fast-moving Christchurch property ladder is incredibly trying for many first home buyers. Rising prices, listings dropping and FOMO buying is stoking the already smoldering fire sparked by the falling interest rates. Couple these factors with New Zealand’s global image as the safest of havens, you have all the ingredients of a boom…and we haven’t properly opened the borders yet! The lolly-scramble that has become the housing market of late is hard to fathom from the point of view of an established property owner but the reality for the first home buyer is contrastingly stark. We recently met a real estate agent who told us a story that summed up the heat in the market right now:
A lady was sat comfortably on the couch at an open home. The agent asked in jest if she liked it so much that she’d made herself at home. Her reply: I can’t find my shoes outside, there are so many people, I’ll wait until everyone else has their shoes and hopefully mine is left. There were 73 groups through that one open home, gridlocking the street!
This must be a despondent sight for FHB’s, looking at the hordes of people eyeing up the same asset that they want to purchase. It has an almost ‘Black Friday at Walmart feel about it’. We sympathise, we truly do. With this in mind, we thought it would be pertinent to pen an article about some of the positives that we can look at. And some of the small ways in which Arete are trying to help. Hopefully these small insights might alleviate a little bit of the market anxiety FHB’s must be feeling right now.
1. People are finally selling their damaged properties. It’s a good time to sell! Selling your earthquake-damaged property on an ‘As Is Where Is’ basis to the right people (people who repair them) will essentially increase the pool of purchasable properties in the market. When they are sold as is where is, there is no way of getting bank funding as they are still damaged therefore rendered uninsurable…banks don’t want a bar of that! If sold to the right people, like Arete (I hear they’re pretty good), their business model is to buy>repair>re-insure>resell. Last year we bought and repaired over 50 homes, plonking them back into the market with full insurance. It may only be a small slice of the housing market, but it’s something we are very proud of. Someone asked me if As-Is prices are going up as stock goes down…not really. The land component is rising, as with a normal home but the dwelling price is actually going down as the home remains unrepaired. Supply and demand works a little in ‘As Is’ but the main price point comes down to repair costs and end value.
2. Healthy Homes is starting to tighten its grip around the wallets of landlords countrywide. It’s a hard test to pass, even some new builds have been failing health homes tests (honestly!). The cost to upgrade some older homes is just too much for many landlords. The timing couldn’t have been better for them to sell their older dwellings. These will either represent good value to the FHB who is willing to add a bit of sweat equity buying a do-er upper. Or, depending on the location, the home might be ripe for redevelopment.
3. New builds. Many FHB are becoming more open to the option of buying off plans. This can be done with a lesser deposit, between 5 and 10%, and even comes with the First Home Buyers grant of $10,000 for buying new! Makes sense to get the free money if you qualify. There can even be lower LVR (Loan-to-Value Ratio) loans available. The new district plan allows for more development within Christchurch so there should, in theory, be a lot more new homes being built within the city over the next few years. Even Arete are moving into the development field this year. We only ever bought properties we knew we could repair, but the ones that needed demolishing we would pass up on, until now! We are adding to the housing stock by adding more, new homes on previously derelict sites. This is another step forward in the gentrification and residential rebuild of our city which we are incredibly excited to be a part of. We love the opportunity of being able to provide new, livable homes for families over the next few years. We’ll continue to do the ‘as is where is’ repairs on the repairable properties, but we are happy to be diversifying our offerings into the Chch property market.
So hopefully it’s not all doom and gloom for the FHB’s out there. And remember if you know of an ‘as is where is’ that you would love to buy but it’s uninsured, we have worked with people in the past so we buy it, we repair it, then when it’s finished – they buy it fully insured with bank finance! We’re a creative bunch J