Research KNIGHT FRANK TC3 SALES RESEARCH
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research march 2013 KNIGHT FRANK TC3 SALES RESEARCH Executive summary of information Gathered • In 2010, the average house sale price to of TC3 properties in comparison with involve more work to sell, however rateable value ratio for Christchurch City Christchurch City as a whole and the many were experiencing good success, was 93.1%. This is further analysed to surrounding TC2 areas. especially in the suburbs of Fendalton, Merivale, Strowan and Parklands. 99.1% for the properties studied that • Many of the suburbs affected by TC3 would become TC3, and 97.9% for the zoning showed some recovery of their • A number of those surveyed concluded areas surrounding those properties. sale price to rateable value ratio in 2012. that it was more difficult for first home buyers to purchase a TC3 property, • In 2011, the average sale price to • The Days to Sell figure for the TC3 because banks generally require more rateable value ratio for Christchurch areas studied was longer than that of security on these properties. City was 96.1%, 94.4% for the TC3 Christchurch City. In 2011 it was 38 for areas studied, and 99.9% for the areas the areas studied, compared to 28 for • Insurance cover on TC3 property is surrounding TC3 properties. Christchurch City. In 2012 it was 34 for available where an insurer has previously • In 2012, the average sale price to the areas studied, compared to 27 for provided cover, all insurers assess cover rateable value ratio for Christchurch Christchurch City. on a case by case basis. City was 99.4%, 97.9% for the TC3 • The number of sales in the areas studied • Overall, the statistical analysis indicates areas studied, and 102.2% for the areas was 1106 in 2010, 649 in 2011, and 709 that TC3 zoned property take longer to surrounding TC3 properties. in 2012. sell and are harder to sell, but for the majority, there is no significant pricing • The information indicates that there • According to the Real Estate discount. has been a very minor effect on values Professionals surveyed, TC3 properties march 2013 KNIGHT FRANK TC3 SALES RESEARCH The Canterbury earthquake activity of 2010 banks about any concerns they may have and 2011 has resulted in much uncertainty with customers purchasing TC3 properties. and confusion in the residential property The information gathered has helped market. to give us an understanding of how the Following the earthquake on 4 September market perceives properties in TC3 areas. 2010, the Canterbury Earthquake Recovery We also attempt to identify if there is a Authority (CERA) was formed by an Act of difference between sale prices of TC3 Parliament. CERA has divided residential properties compared with those properties land in Canterbury into two zones; the that immediately surround the TC3 areas, Green zone, which is land that is considered these being in the TC2 category. suitable for residential construction, and We analysed sales over a number of time the Red zone, which is land where repair periods to give an understanding of what would be uncertain, costly and probably is happening with values over time. The highly disruptive. periods studied include all of 2010, 2011 Land in the Green zone has been further and 2012. As well as analysing each year divided into three categories, used to separately, we also looked at values in 2010 describe how the land is expected to before the September 4th earthquake, perform in future earthquakes. The then between the September and February categories are: earthquakes, followed by the rest of 2011 after the February earthquake, and then • TC1 grey: future land damage from all of 2012. The method adopted has been liquefaction is unlikely. Standard to compare sale prices with the property’s foundations can be used as long as the rating valuations. site meets the ‘good ground’ test. The results of the study have been • TC2 yellow: Minor to moderate land somewhat surprising, with the sale values damage from liquefaction is possible in in comparison with rateable value in TC3 future significant earthquakes. Shallow areas being only slightly below that of geotechnical investigations may be Christchurch City as a whole. required, depending on damage. The following table indicates the Average • TC3 blue: Moderate to significant land Sale Price to Rateable Value Ratio for damage from liquefaction is possible in Christchurch City, TC3 areas studied, and future significant earthquakes. Site-specific areas immediately surrounding the TC3 geotechnical investigation and specific areas for 2010, 2011 and 2012. We included engineering foundation design is required. sales for the whole of 2010, in order to The focus of this research is on properties identify any trends from the data. that are in the TC3 category. We observed that there has been very little factual information to date around the sales of TC3 The overall picture is that initially the sale price properties and what effect the TC category to rateable value ratio dropped some 5% in may be having on values. We have collated actual sales information from properties the TC3 zoned sales between 2010 and 2011, that have sold in selected TC3 areas within Christchurch City. We analysed a total of recovering somewhat through 2012. The whole over 2400 sales of property; including those of Christchurch saw 3% growth per annum. in TC3 areas across 21 suburbs, as well as sales of TC2 category properties that immediately surround the TC3 areas. We Table 1 Average Sale Price to Rateable Value Ratio have compared this information with that Area 2010 2011 2012 of Christchurch City as a whole. Christchurch City 93.1% 96.1% 99.4% In addition, we have spoken to a number TC3 areas studied 99.1% 94.4% 97.9% of Real Estate Professionals about their Surrounding sales – TC2 Category 98.0% 99.9% 102.2% experiences in dealing with the sale of TC3 properties. We have also made contact TC3 & Surrounding areas combined 98.5% 97.7% 100.6% with a number of insurance companies and The following table gives the average sale price to rateable value ratio for each TC3 area studied before, during and after the earthquakes: Table 2 Average Sale Price To Rateable Value Ratio Suburb 1/1/2010 to 4/9/2010 5/9/2010 to 22/2/2011 23/2/2011 to 31/12/2011 All of 2012 Aranui 100.2% 102.8% 93.3% 93.0% Avondale 95.9% 96.9% 92.0% 97.8% Bryndwr 116.2% 106.1% 99.2% 106.3% Burnside 91.5% 86.2% 97.7% 106.8% Burwood 97.3% 96.7% 100.6% 98.5% CHCH Central 98.6% 98.3% 93.1% 104.9% Dallington 97.7% 89.8% 98.3% 96.5% Edgeware 95.9% 94.8% 93.2% 93.5% Fendalton 96.1% 89.3% 102.2% 97.5% Ilam 96.0% 120.3% 87.9% 117.8% Mairehau 100.3% 103.9% 100.4% 103.1% Merivale 105.7% 104.2% 107.8% 100.7% New Brighton 93.2% 96.6% 72.2% 97.9% Nth New Brighton 96.0% 91.7% 98.4% 101.0% Parklands 99.0% 93.9% 98.7% 97.3% Riccarton 89.7% 107.9% 94.7% 82.8% Richmond 99.0% 93.9% 98.7% 97.3% Shirley 96.4% 95.8% 99.1% 104.2% St Albans 98.5% 101.6% 98.6% 103.9% Strowan 96.9% 98.7% 101.5% 109.4% Wainoni 95.9% 105.9% 91.0% 93.6% As expected, some of the suburbs we The remainder of 2011 following the studied had better results than others. February earthquake, the suburbs Prior to the earthquake on 4th September Merivale, Fendalton and Strowan had the 2010, the suburbs of Bryndwr, Merivale highest percentages, and the suburbs and Mairehau had the highest percentage, New Brighton, Ilam and Wainoni had the and the suburbs Riccarton, Burnside and lowest. New Brighton had the lowest percentage. During 2012, the suburbs Ilam, Strowan It should be noted that only Riccarton and and Burnside had the highest percentage, Burnside had figures below that of the and Riccarton, Aranui and Edgeware had whole of Christchurch. The small number the lowest. of sales for these two suburbs available for analysis would suggest this result is not particularly significant. For the period between the two major earthquakes, the suburbs Ilam, Riccarton and Bryndwr had the highest percentage, and the suburbs Fendalton, Dallington and Burnside had the lowest. percentage. It should be noted that only Riccarton and Burnside had figures below that of the whole of Christchurch. For the period between the two major earthquakes, the suburbs Ilam, Riccarton and Bryndwr had the highest percentage, and the suburbs Fendalton, Dallington and Burnside had the lowest. The remainder of 2011 following the February earthquake, the suburbs Merivale, Fendalton and Strowan had the highest percentages, and the suburbs New Brighton, Ilam and Wainoni had the marchlowest. 2013 KNIGHTDuring 2012, the FRANKsuburbs Ilam, Strowan TC3 and Burnside had the highest percentage, and SALESRiccarton, Aranui RESEARCH and Edgeware had the lowest. The graph below shows a comparison of the Sale Price to Rateable Value Ratio for the years 2010, 2011 and 2012, giving a comparison to Christchurch City. Sale Price to Rateable Value Ratio Christchurch City Aranui For Indicated Suburbs by Year Avondale Source: Knight Frank Research Bryndwr 140.0% Burnside Burwood 120.0% CHCH Central Dallington Edgeware 100.0% Fendalton Ilam 80.0% Mairehau Merivale 60.0% New Brighton Nth New Brighton 40.0% Parklands Riccarton 20.0% Richmond Shirley 0.0% St Albans 2010 2011 2012 Strowan Wainoni For the year 2010, only one of the suburbs studied was below the Christchurch City average.