Flood-hit homeowners face short-term value shock

By Paul Dykes
Homeowners in flood and slip damaged areas of Tauranga face an immediate substantial drop in property values - but over time prices will return to near normal levels.
That's the view of leading local property valuer Roger Hills, who has seen the price impact at first hand and other valuers largely agree.
The valuer from Hills and Haden in Wharf St said one property in Otumoetai that was 30m from a slip sold recently "at 20 per cent below what we would consider a reasonable price".
This equated to about $60,000, he said but added that the seller was an investor keen to quit the property - not an owner occupier.
Richard Schramer, a valuer with Bay Valuations in Willow St, agreed that anyone selling in an affected area right now would take a hit in value but that this would diminish over time.
And John Almao, a valuer at Almao and Green in Third Ave, said property buyers would be wary in the short term, especially if they can see evidence of flood or slip damage.
The men were reacting to a comment by mayor Stuart Crosby that the council would tag the LIM report property files for all affected properties with a note setting out the damage suffered in the May storm, and detailing all remedial work.
Mr Crosby assured homeowners at public meetings this week that estate agents had told the council that no "significant loss of value" would occur over an unspecified period of time.
But the registered valuers see it differently.
"There's no question. It will definitely have an impact on prices," said Mr Schramer.
"Properties have been able get away with conditions in the past that outsiders were not aware of. There will be saleability issues here, although it is hard to quantify in monetary terms. People have fairly short memories."
He said buyers in Otumoetai, for example, were seldom first-time buyers, and generally did their homework before committing to a purchase.
"It might take longer for the storm effect to work through, and for people to sell their house," he warned.
Mr Hills said there had been a similar discounting of prices after the Maungatapu slips in the late 1970s and mid-90s, and slips in Minden and Omokoroa but prices had subsequently recovered, generally after three to four years.
"It takes a while for confidence to build up," he said "but if you were assured by the remedial work that had been done, then you would buy.
"People would want to know the risk - these slips have been more substantive than the other ones. Out over a decade, the effects will have diminished."
The city council confirmed yesterday that the LIM reports tagged would be only those properties that suffered actual flood or slip damage, not neighbouring homes.
Mr Almao and Mr Schramer both felt the softening in the market at present was not just because of the May storm.
"The market is feeling its way a bit at the moment after a boom run, so activity is not the same," Mr Almao said. "It is more related to a change in the market due to wider economic conditions."
Mr Schramer said he had just compiled statistics that showed 8617 houses were sold in the year to January 2005 from Waihi to Maketu but since then only 4168 houses had been sold.
"I can't imagine in the next three months we are going to sell 4000 houses," he said.
"The average home sold for $300,000 say, so at 3.5 per cent sales commission the industry earned $80 million in the year to January 2005. You can imagine the impact the lack of income this year is going to have.
"I'm not trying to be a gloom merchant - I'm just dealing with the facts."
He said it would not be just the real estate agents who would feel the impact of this downturn. Related building and home improvement operations would also be hurting.