How to build wealth in Christchurch post EQ

[crashy]

There does not seem to be a lot of discussion about building wealth post EQ. It is said that "good luck is preparation meets opportunity". I'm seeing a truckload of opportunity, but ZERO preparation.

Some people only see short term destruction, inconvenience, poor job prospects & abandonment.

I see longer term:
- massive government spending
- lower interest rates
- unprecedented building activity
- better infrastructure
- many thousands of effectively renovated properties (via repair or rebuild)
- better insulated & quieter homes make Christchurch more bearable
- higher rents
- high rental demand
- more people preferring renting to buying (for the next 2-3 yrs, then this will flip)
- lower purchase prices
- high supply and low demand for property (for the next 2-3 yrs, then this will flip)
- a city that will be bigger & better (good for values long term)

So from a property investment point of view we have:

- initially large numbers of people desperate to sell
- positively geared property a plenty
- rebuilt properties with lots of depreciation
- lots of growth guaranteed
- less maintenance costs because buildings are newer
- modern buildings attract better rents
- rising property values (after crash)
- renovations funded by EQC

How do EQC payments fit in to all of this? I don't know how the whole EQC system works. I noticed on a contract yesterday that EQC payment would go to the purchaser. Now if somebody is desperate to sell, and does not want to wait 12-24 months for their home to be rebuilt, and find somewhere to rent, is it possible they would sell the property below value, with EQC payment pending?
If the existing building had a value of $40k, and to rebuild costs $100k, and there was no insurance, EQC pays $100k? What if you do an owner build? How long do you have to rebuild? What stops you from putting temporary housing up & renting it out?
Or, are people more likely to wait for their EQC payout (assuming they dont have a mortgage) then leave? And how cheap would they then sell if they do no repairs?

[Keithw]

Mostly valid observations crashy, but you are GAMBLING, not investing.

re EQC- if there was no insurance, there is NO EQC payout !
ie you have to have insurance in order to be covered for EQC (its a part of the insurance)
What stops you doing any of these things ? CERA !!!!!
they want to control EVERYTHING that gets done, so will take ages to decide what they will allow & what they won't.

BTW dont think there will be a ton of depreciation available, The IRD will try to put most down to Building Improvement, & there is no longer any building depreciation !

[One]

if there's no insurance, EQC pays nix. Don't know what's going to happen to uninsured people.

[Bob Kane]

Good to see you're positive, crashy.
Have you thought about future earthquakes?
Or are you expecting none in the future?
If there's a big one every year and it wipes out the sewerage system (every year) - who will live there?

[DazRaz]

If there's a big one every year and it wipes out the sewerage system (every year) - who will live there?

Is there any place in the world that has a big one every year? Why would you think this is suddenly a possibility for Christchurch?

[Baby Boomer]

Is there any place in the world that has a big one every year? Why would you think this is suddenly a possibility for Christchurch?

Purely observational; the ground under Christchurch has been churned and the settling down period could be a long one.

[crashy]

It is nothing different to every other earthquake in history. And yet life carries on everywhere else.

[Viking]

Saturday, 2 April 2011

The Peoples Republic of Christchurch faces bankruptcy, the prospect of cholera outbreaks.

Irrespective of what-ever spin you wish to give it – The Christchurch City Council (Politburo for The Socialist Republic of Christchurch) is ****ed well and truly.

As a campaigner for a fairer, more equitable council rating system – I take some perverted satisfaction in their demise, even if it means I’m on the same sinking ship, living in the same stinking city.

The bleeding obvious is The Council needs to fund from its current revenue a multi-billion dollar re-build of Christchurch. Conversely the Christchurch City Councils revenue stream is about to fall by 10 to 50 per cent.

The Christchurch City Councils expenses are about to increase exponentially the other way. Mass-devaluation on an unprecedented scale will spell financial doom.

Despite my own perennial exacerbations that rates should reflect services received the Christchurch City Council has towed the line with a belief rate-payers should pay mostly on the value of their houses.

Well ALL those houses went down in value in September 2010 and February 2011. Some of those houses are all but written-off, the land they are on proposed to revert to wet-lands.

Valuers looking at a location in the worst affected areas of town will be concluding in many instances, the property/house package is worth next to nothing. For say 20 per cent of Christchurch residents the land their house now sits on is all but zero rated.

Once rate payers in town start employing independent valuers to contest their ‘Government Valuation’ and their appraisal befits the reality of the Christchurch real-estate market as it currently sits– then most if not all rate-payers in Christchurch are due to receive a welcome fall in their rates in-line with a their property value.

For many rate-payers located in previously vulnerable suburbs, those devaluations are in the 100’s of thousands = rate relief in the hundreds. Then there’s the household that have simply packed-up and left. Who is going to want to come into the city and buy their properties? More de-valuing, less rates revenue through less rate payers.

The City Council will be forced to borrow billions to re-build the city’s infrastructure and no commercial bank is going to lend them a cent given their falling income stream.

When projects like the complete re-build of the sewage system falter due to lack of money, health official predict a Cholera outbreak, the Government will then need to intervene, re-look at the way council rates around the country are accessed to prevent the same thing happening in other cities.

Posted by Warm and Loving at 08:10 Email This BlogThis! Share to Twitter Share to Facebook

[One]

Things seem to be settling fairly quickly after this last shock. (Touch wood!)

I reckon we're at risk of another 5+ aftershock for about the next year, based on what the geologists are saying from other shocks worldwide.

Then it's back to "normal". That's the alpine fault, which means about 65% probability of a major earthquake in Canterbury in the next 50 years. Not sure if that's the probability of the alpine fault going or the probability of it going and being big enough to be a problem for Christchurch.

And there could be more hidden faults under Canterbury. I heard mention of geological surveys to see if there are any of those, hopefully that's happening.

So Christchurch can expect another big one in the foreseeable future but not every year!

[Viking]

Christchurch sewerage system on brink of failure
BEN HEATHER Last updated 05:00 02/04/2011

Christchurch earthquake

Christchurch's sewerage system is on the verge of collapse, threatening to blanket the city in an "almighty stink" till Christmas.
Christchurch City Council water and waste operations maintenance manager Mike Bourke said staff were working furiously to fix the quake-hit sewerage system, but it remained on a "knife-edge".
He called on Christchurch residents to work harder to conserve water or risk overloading the sewage ponds, leading to a city-wide stench.
"If we overload the ponds it will create an almighty stink. It won't just affect the eastern suburbs, you'll smell it in Hornby."
The choke point was the quake-crippled Bromley wastewater treatment plant, which was processing sewage at only 30 per cent of its normal level.
That had forced the council to release more untreated water into the 230 hectares of oxidation ponds and there was a 50 per cent chance that the oxygen level would drop below functional levels, turning the placid lakes into a vast cesspit.
Once the tipping point was reached it would be difficult to reverse and the smell could linger for months.
"It will take many months to get them operating, probably till Christmas."
The Bromley plant has also been dealing with an influx of debris and sand which has infiltrated the crippled pipe system, putting further pressure on its already-stressed filtering tanks.
Bourke said since February 22, the plant had sucked about 1000 tonnes of sand out of the sewerage network.
The plant itself could take anywhere from six months to two years to fix.
The council was still building a picture of how badly damaged the sewerage system was, but with many pipes too clogged with sand to inspect, this could take up to eight months.
He compared the sewerage network to a tree, with each home a leaf connected to a sewerage branch, which in turn was attached to the main trunk leading down to the treatment plant.
Repairs were starting at the tips of the branches and working back to the main trunk, meaning some repaired pipes would still fail to work until breaks further down the line were discovered, Bourke said.
The council has 92 trucks flushing sand out of pipes and 11 crews putting cameras down mains to survey the damage.
The latest figures show that six per cent, or 96 kilometres, of Christchurch's sewerage mains were not working, with a further 27 per cent, or 474km, working only slowly.
The slow-moving flow of effluent in the pipes was presenting the biggest headache for council, and also potentially health authorities, because they were still leaking millions of litres into backyards, rivers and the sea, he said.

A quarter of Christchurch's sewage, about 40 million litres a day, was still leaking out of broken pipes.
While this was a massive improvement from 60 million litres a day just two weeks ago, it would still be months rather than weeks before rivers and beaches were found to be safe.
"I'd hope come summer you would be able to surf again."
For residents in eastern Christchurch using chemical toilets, Bourke said the wait for a flushing loo could take anything from a month to a year.
- The Press

[ream]

Not sure about the leaf/tree analogy - maybe they're doing different things in different areas. We live on a street with a broken (very broken) trunk sewer down it. It has 16 breaks in it that they've been able to find so far, and as we've had raw sewage overflowing into the road they've started working on it already before bothering to start on the side streets or any properties off it.

They've dug down 3.5m (way more than they should have had to go apparently) and have not found it. It has gone. A trunk sewer line, just disappeared. This is near a spot where a 3-car hole opened up and enough silt was pushed upwards to leave the pavement 1m down the hole. I think Bob's 'munted' may not be a strong enough word.

I believe they're trying to put a new one in without actually finding the old one, and meanwhile we have pumps running in the street 24/7 to pump stuff out of one hole, around where they're working and back into the next hole. Of course the heavy machinery is also making the houses shake all day, which isn't very nice, but those of us not getting freaked out with bad memories are definitely appreciating it.

Incidentally, and while I finally have a chance to actually type something in here, is anybody else in Chch finding that certain sites (like PT, & also Stuff for one) are often taking minutes or even hours to load each page? Occasionally they go back to normal speed, but there are a few sites that are being consistently extremely slow and an absolute PITA. Or is it just me? We're on Telstra FWIW.

[Baby Boomer]

We are slow and jerky too, on xnet.

You poor people having to live with that. What a gas though, the pipe disappearing!

[speights boy]

Following on from that email that Viking had received and posted.

I think there would be good support for a bond issue from the CCC
The Auckland City bonds are all trading at a lower yield (higher price) than at their issue.
This is mainly because of their excellent security ...Auckland rates.

Sure, there is justifyable concern about the CCC rates situation, but if these bonds were capital protected by Government, there would be plenty of people willing to put their money into them at a low interest rate.

The University of Canterbury when they issued their bonds had an option where people could forgo their interest. So basically lending the UOC free money.

While the same may not be willing to do so for the CCC, I think people would accept quite a low rate, in order to help out with funding over the next 5 years.

[ream]

Baby Boomer, it's taken me till now to get your post up - that's how slow PT is for me atm

I'm just glad we're not in the next street, where people are having sewage come up in their gardens because other people in the street are continuing to flush instead of using the chemical toilets.

So yeah, property investment in Christchurch has changed a little.

[Bob Kane]

Purely observational; the ground under Christchurch has been churned and the settling down period could be a long one.

That's what I'm getting at.
I'm no sewerage expert but it seems sewerage systems consist of concrete pipes buried 2+ meters underground.
Every new earthquake will damage the system which will be expensive and time consuming to fix.
Perhaps they need to install some sort of flexible, shallow system that will be easier to repair/fix?
If bowels are moving every day then the sewerage system can't be out of action for 12 months or so.
I'm picking that the novelty of chemical toilets is wearing off.