Government red zone offering a positive change - QV
Thu, 23 Jun 2011 5:04p.m.
By Talia Blewitt
Today’s offering from the Government to Christchurch residents who own property severely affected by the earthquakes will prove to be good news for some but a financial headache for others.
Greater Christchurch has been divided into four coloured zones to define those areas which are at risk and “unlikely to be suitable for continued residential occupation for a prolonged period of time”.
Those in the at risk ‘red zone’ have two options; take the Crown offer for entire property at current rating value, or take a Crown offer on land but deal with property through insurers.
The director of market valuation company QV, David Rankin, says “it really depends on individual circumstances”.
“You could have two properties which, let’s say, have the same market valuation. One could be an old house with no work done to it so the replacement valuation is a heck of a lot less. Taking the money for the land and dealing with an insurer for the house, then moving to another site, could see those people stand to make more money.
“But a modern house with higher replacement value doesn’t have the same opportunity for major gain. They would probably take up the land purchase offer, which could be half that of a property in a better location and then have to fund the difference.”
Mr Rankin does not think the house market in Christchurch on the whole has changed greatly, prior or post earthquakes.
“The market hasn’t really had a major swing.”
Based in Christchurch himself, Mr Rankin believes the Government’s solution so far is “hugely positive for those living in the red zones”.
“If people follow the system, in time people could be better off, property and house value wise,” says Mr Rankin.
“This has stimulated activity, and activity stimulates people’s attitude. It’s helping them out of a stressful time and giving hope.
“Most of us don’t like change, but change can be a positive.”
Mr Rankin’s main point of concern is seeing the severely damaged areas being of lower market value in the first place, prior to the September 4, 2010 earthquake.
“Those people will have to transfer and upgrade to higher value areas, and I really feel for them.”
“Property is the major investment of a lifetime, it’s heartbreaking.”