Safe as houses?

In pre-earthquake Canterbury, real estate ads breathlessly boasted designer kitchens, popular school zones and to-die-for views.

Post-quakes, buyers and renters are being tempted by the very unsexy "level and solid", "minor cracking only" and "engineer's report available!".

In a quiet Wainoni street, David White has been trying to sell his pretty three- bedroom timber bungalow since spring.

"Sturdy, ideal for kids and pets, schools within walking distance," says the ad. Since the September quake, White has pulled down the broken chimney, mended the roof, and painted two bedrooms. But buyer action was slow, and once White moved out he still had to pay the bills.

"It's been just a wee bit demoralising trying to make ends meet and keep our heads above water," he says.

Then the February shock hit, and White realised he might be better off looking for tenants instead.

"If I could sell it tomorrow, I would. If someone came along with $260,000 or $270,000, I would be absolutely delighted.

"But I think the price would probably be rock bottom because of the quakes out this way. I just don't think people want to be close to the epicentres.

"So I thought it was a good opportunity to rent - there are lots of people looking for somewhere safe, and there's just cosmetic damage, so I might as well try and get some income from it."

If September's quake gave the real estate market a thorough rattling, then last month's shook it to the core. This time, not only have homes and land been damaged, but residents and jobs have gone.

Sandy Bond has spent the summer as both market expert and househunter, looking for a home in Christchurch after taking up the position of property professor at Lincoln University. She was surprised how quickly the market picked up after the September quake and how many other buyers were out looking. Pent-up demand for undamaged homes fuelled sales for a time and even boosted prices.

After that quake, once buyers had scrambled for engineers' reports and insurance cover, sales levels got back to their low pre-quake levels by November. But this time could be very different, she says.

"We are crystal ball gazing, no-one really knows what will happen. A lot depends on decisions made by Government and there's a lot of uncertainty out there.

"Things have changed dramatically in the badly affected areas, while others will still be in quite strong demand. Some places will be stigmatised at least until the land is remediated."

Bond says despite the fall-off in population and jobs, workers coming in to help rebuild Christchurch could even up demand. And while buying and selling have slowed, wrecked houses will mean big rental demand and this could encourage landlords to buy.

Election-year jitters, interest rates and the like are usually hot topics when experts discuss the direction of the housing market. But Christchurch economist Robin Clements says these influences will now count for little compared with the effects of the quakes.

Like the rest of New Zealand, the city has been in a house building slump and quake damage has compounded the resulting shortage.

Big decisions about land use, rezoning, temporary housing and construction timeframes - all in the hands of the authorities - will steer the city's housing market, Clements says.

Buying will get easier when law firms, the council and insurance companies get back to normal, but if the lack of homes is not addressed "people will just decide they've had enough and leave".

A portaloo at the gate and cracked wall linings are hardly the recommended recipe for real estate success.

Despite the uncertainty, there are buyers and sellers feeling the fear and doing it anyway, even in the worst-hit areas.

When the February quake shook up the seaside suburb of Redcliffs, Kevin and Jane had just agreed to buy a modern townhouse in Raekura Pl.

The contract was sitting on real estate office owner Craig Prier's desk, waiting to be passed to lawyers.

"When we got back into the office later, everything was scattered and on the floor. We picked the contract up and I thought 'that one will fall through'," Prier says.

But Kevin and Jane were determined to carry on. Especially when they found their existing home up the hill on Egnot Heights was wrecked, the land around it unstable, and they were homeless.

The couple had planned to rent out the new townhouse and retire in it later. They quickly redrew their plans.

"It's not ideal, but at least it's ours. We've lost our fabulous view but you can still hear the sea," says Kevin, who does not want their real names used because of his job.

At first they feared aftershocks could tumble rocks onto the townhouse. A rockfall on February 22 had crushed a home at the other end of the street, but a geo-technical report reassured them they were in the clear.

Pushing on took persistence. The contract had to be delayed while they "jumped though hoops" for their bank, finding a structural engineer to assess minor damage to the townhouse was tricky, and the legal work was slow. They were refused insurance by their own insurer and several others, finally convincing the previous owner's insurer to take them on.

"It took a lot of legwork, we had to chase them," Kevin says. The couple found those weeks difficult, with their fate in the hands of others. "It feels good now, we're starting to move forward and we feel we've got some control - it just relieves the pressure we were under, not knowing what would happen."

Bevan Fleming values property for a living, but is finding the going tough.

"I've said to clients, 'I'm just not sure I can value that because there are so many uncertainties'.

"This has just been such a major event. The difference between the September quake and this one is it's had such a big impact - so much of Christchurch's housing stock is just not in a position to be sold. And the land is still shaking.

"There's not a lot of confidence. People are dealing with lost businesses, jobs, and homes, and the central city's been annihilated. Most will not even be thinking about buying and selling yet."

Fleming says that whatever house values do now, buying has just become several thousand dollars dearer.

"Add up the building report, engineer's report, geo-tech report and valuation. That's a lot of money to spend and there's no guarantees of getting it over the line."

As sales fall away, with them goes work for real estate agents, valuers, mortgage brokers, and property lawyers. Sales in January were already at an all-time low nationwide.

Now there are reports of real estate salespeople leaving town, driving taxis at night or signing on at Winz. "When you take out such a big chunk of the city that's not going to be saleable, it will affect a lot of jobs," Fleming says.

Over at Harcourts, southern business development manager Jim Davis says that while some salespeople have left the industry or the city, it has been just a few so far.

"It's hard for them because the volume of business has dropped off. Like a lot of people they're having to work harder to probably earn less."

Harcourts' March sales were lower than usual but better than expected. "The old normal has gone. This is the new normal."

Or as Fleming says, while the west side of town could get back to "business as usual", there are too many decisions about land use and rebuilding on the east side for normal to return yet.

Davis says most post-quake sales have been where damage is least.

But a suburb is not just about affordability or desirability. It is also about the local kindy or the bowling club, and people may be reluctant to shift out of a community they are part of.

Davis warns against talking down the market in the hardest-hit parts of town.

People still want to buy and sell in the same neighbourhoods and keep their children in the local school, and wrecking any market confidence only does needless harm, Davis says.

"A lot of people can't just get up and move."

Ray White agent Andrew Gardiner says his office covering south Christchurch has signed up "four or five" deals in the last week and a half.

"There's been a couple pulled out of the market because of damage. If it's not a saleable property, they are pulling it off. We are still selling houses with damage, and contracts are having to be pushed out a bit longer."

Craig Prier says open homes in the post-quake city are very quiet, but he is sure confidence will eventually return.

"People selling and buying now are genuine - there are still births, deaths and marriage and people need to shift. And this is still a good place to live."

SOUND ADVICE

BUYERS:

Do not rush. As always, but now even more so, do thorough due diligence.

Insurance cover: the stand-down period is on a case by case basis - it may be unlikely you can get new insurance cover and secure finance.

Get up-to-the minute legal advice.

SELLERS:

Do not panic. Sales will be limited for a while. For undamaged areas this could last months, but for others a sale could be years away.

Damaged properties: it's best to get EQC assessment, wait for repair, then get a signed-off structural engineer's report before listing. Or be prepared to take a significantly lesser price reflecting the buyers' potential risk.

Get up-to-the minute legal advice.

RED OR YELLOW STICKERED?

Are you looking at potential demolition of your home or rental property? Get a second opinion.

Do not sign any insurance payout agreements before getting your own professional, independent valuation advice.

Your house is your largest asset so make sure your insurance payout is fair. Every $10,000 counts

Source: Bevan Fleming, Valuation Solutions

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