Again the story of the east frame is in the headlines. From my experience over recent weekends of open homes, I can certainly say that people do want to live in the inner city and of course they still want their car parks, as mentioned in the article by Liz McDonald.
The article also comments that Treasury have noticed a mismatch between what Fletcher has built and what buyers want. I agree. Most buyers in these price ranges want some input into the final design, for example interior colours and finishes. As Fletchers don't sell off the plans, they are unable adjust any aspect of the build. They have no interaction with the buyers prior to building completion. Fletchers rather arrogantly expect the buyers to be pleased with all the interior choices they have made. This lack of buyer involvement severely affects the sales process, people want to put their individual stamp on their home.
Interestingly no one interviewed in the article mentioned (I think) the real impediment to apartment building, that complexes have a limit of four storeys. Apartment buildings in Wellington, for example, are typically 7-8 storeys with 50-200 apartments per complex. The complexes mentioned in the article struggle to get past 20 apartments per complex, the exception is of course 36 Welles Street with 100 apartments, of which about 20-23 are still for sale.
The buyers I have spoken to say they want apartments on one level. That's because the people looking in the city in the $500,000 plus price range are aging. Most of the Fletcher apartments are on three levels. Not great for bad knees and arthritic joints. City living should be easier not harder. So there's lots Fletchers could do - watch this space.
Recently there has been much debate around car parking and apartments in Christchurch. There are a number of new apartment complexes being built with neighbouring residents wondering where all the cars will go.
The most recent example is the Williams Corporation development on 420 Hagley Avenue. This development has 39 apartments and no car parks. Current residents are concerned that the apartment complex will add further stress and competition between hospital staff and visitors, Hagley Community College and netballers for car parks. It will be very interesting to see how all it works out. From personal experience visiting someone at the hospital, even at night, finding a car park was extremely difficult.
From my experience, cars and apartments still go together. Buyers and tenants at open homes usually want to know is there a car park? It remains a significant factor in their buying and renting decisions.
At present public transport does not meet everyone's needs. According to the Ministry of Transport, only 35 per cent of people in the city used public transport in the last year, in Auckland it's 60 percent and 77 percent in Wellington. Also the routes are not that user friendly and current passenger numbers are around 80 percent of pre-earthquake numbers.
Car park size also important. Living in the city does not mean those living in apartments will be giving up their cars or SUVs. Car park size need to be considered when building new developments, with plenty of clearance to manoeuvre a long and wide SUV.
I raise this about SUVs as I saw this recent article by David Chaston about which motor vehicles are currently being purchased. The love affair with SUVs continues. I have put the link below so you can read the full article.
As David Chaston notes "New Zealand's new car market is changing fast - even if the number of new cars sold has topped out. We are choosing SUV's increasingly when we do buy new.
In fact, now more than two-thirds of all new cars sold are SUVs. The sales of SUVs are growing at +9% year-on-year. Sales of traditional sedans are falling -9% pa on the same basis.
SUVs of course come in various forms; compact, medium, large, and luxury. Sales of the compact category have been on the move higher, and are now at a bit less than 30% of all SUVs. In the year to June 2017, their sales were up +22%.
The medium-sized category won almost 43% share in June, and that is growing at an +11% rate. But the large category is losing favour, selling -6% less in the year to June.
year to year to
June 2017 June 2018 change
# # %
SUV - compact 15,760 19,164 21.6
SUV - medium 24,374 26,947 +10.6
SUV - large 18,826 17,774 -5.6
SUV - luxury 831 1,018 +22.5
Passenger cars 48,093 43,828 -8.9
Total 107,884 108,731 +0.8
Posted in News July 05, 2018 - 02:11pm, David Chaston
I hope you have found this useful, and please let me know your thoughts by commenting.
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Age of Property
Well the dust has finally settled after the "bombshell" report by Sir Peter Gluckman, the Prime Minister’s Chief Science Advisor, into methamphetamine residue. Sir Peter found no evidence of health risks from third-hand exposure to methamphetamine smoking residues on household surfaces. (The Link to the report is below).
This is a complete revolution in thinking and is some much needed leadership on a matter that was developing a hysterical edge. Full disclosure is always the best option when selling your apartment.
When matters are not disclosed, people who live around the property may do it for you. In December 2017 a young family found out that the property they had purchased was contaminated with meth, when an anonymous letter was delivered to the house. Can you imagine how they felt?
Full disclosure would have given all interested purchasers an awareness of the situation. So that when the letter arrived, the buyer was already aware and there was no big surprise.
So how does this affect buying and selling apartments?
Methamphetamine, meth or P is a powerful and addictive illegal drug. It can affect the health of people who live in a property where it has been produced or smoked in large quantities.
OFFICE OF THE PRIME MINISTER’S CHIEF SCIENCE ADVISOR
What happens when an apartment owner finds out their tenant has been subletting their apartment on Airbnb?
This week an apartment owner asked the Tenancy Tribunal to rule on the profits from a tenant subletting their apartment on Airbnb. The tenant, under their Tenancy Agreement, had agreed to not sub-let the apartment specifically through Airbnb.
The Tribunal found in the owner's favour and directed the tenant to repay $2,150 to the owner.
However this is an issue that's greater than the profits of tenants on Airbnb. Airbnb have the unique ability to disrupt the smooth operation of an apartment complex.
At an individual level, the owner will not know who is in their apartment and accordingly has no way of vetting these short term tenants. When the tenants have not been vetted, this compromises the safety and security of everyone in the complex. Owners can also expect more wear and tear on their apartment and who will be liable for any damage - the tenant?
The Body Corporate should also expect damage to the common areas, akin to running a hotel. What is the insurance situation for owners and Body Corporates respectively? This should be a concern to owners and Body Corporates alike. Airbnb's catchphrase is "Live like a Local", but what happens when the guests have gone?
Below there is another article about Airbnb operators not paying commercial rates and what Queenstown is doing. One interesting point in the article is that Christchurch has more Airbnb to rent than Queenstown. One host alone in Christchurch has 27 properties available. The article raises interesting questions about apartments being compliant for short term guest accommodation, the resource consent, and disrupting the neighbours.
Airbnb not only disrupts the short term accommodation market, it also has an impact on the rental market. More apartments available for Airbnb means fewer properties for long term tenants to rent. These questions currently face the Christchurch City Council in their Long Term Plan, it will be very interesting to see what they come up with in the Plan.
Just heard this interesting interview between Chris Lynch and Duncan Webb, Christchurch Central MP, about the size of apartments available for rent in Christchurch's inner city.
Not sure with how it compares to the District Plan, which I have copied for your information.
Chapter 14 Residential»14.6 Rules - Residential Central City Zone»14.6.2 Built form standards»18.104.22.168 Minimum residential unit size
22.214.171.124 Minimum residential unit size
When people think of apartment living, they often have a mental picture of childless, pet free households living the inner city apartment lifestyle.
So how does it work if you want to bring the kids or have a dog? Here is an interesting article that goes some way to answering that question. The people interviewed have great ideas about how to make the city an extension of your home. As children of apartment owners have no back yard to play in, a great alternative is the Margaret Mahy park, or Hagley Park to play, walk or cycle in. The Botanic Gardens are also a great spot for flower gazing and strolling.
For children it works if there are lots of local amenities, like parks, libraries, museums, and city events. An upcoming event that is super family oriented is the Botanic D'Lights which illuminates the Botanic Gardens and The Arts Centre.
Held between 8 August 2018 to 12 August 2018, 6pm - 9pm. The Entry points are: Western Gate, Southern gate, Rolleston Ave Gate and Armagh Street Gate. Should be a lot of fun!
The Government is to contractually bound with Fletchers for the development of the east frame. As the article below explains, Fletcher Living is building just on two of the fourteen lots of the project called One Central.
Maybe it is time to hand some of the land over to other developers and interested parties, and see if suitable apartment complexes could be built. Whilst there are penalties in the contract the government has with Fletchers, hopefully the government put some penalties of their own for non-completion, or delays.
As City councillor Jamie Gough has recently said central city living was one of the "most critical elements" of a successful rebuild. It is critical that the an inner city population grows faster than current rates to drive a successful regeneration of the central city. The businesses that have invested in the central city need more than the few pockets of people currently living in the city.
For those apartment buyers looking to buy off the plans the benefits seem obvious. They are getting a new apartment 100% compliant to the latest building code, with all the mod cons and the price is fixed at the time of purchase.
Below is a list of some things to consider before you commit and always seek professional advice before signing on the dotted line.
Location, location, location
Where the apartment development is critically important. How close will you be to local amenities, public transport, shops, supermarkets, cafes and restaurants, cinemas, schools and tertiary institutions. Is it an area where there is lots of development, like other apartments and conveniences? There's no point in purchasing an apartment if you cannot walk everywhere, or it's not handy to city amenities.
Are you going to get plenty of natural light? What about sun? Will your apartment be blocked by a future development? What is being built next door? Choose carefully as these things cannot be changed.
Benefits of early purchase
When buying off the plans you can often choose the best one, well located in the complex for best sun or views. You also may have more say over the design, colours and finishes to put your personal stamp on the apartment. When the market is buoyant, the apartment could increase in value over time.
Disadvantages of early purchase
However if the market falls while the apartment is being built, you could struggle to sell and recover the initial purchase price. Other disadvantages are that the apartment may not meet your expectations once built. The building time could take much longer than the developer initially estimated, or the finish dates may keep being delayed. Worst case the builder goes out of business midway through the build process. You need to be careful and check out the developer's and builder's track record and credentials, be satisfied that you can trust them.
Seek independent legal advice
Get good independent legal advice, there is so much that is different in buying a conventional stand alone home. Make sure there is a solicitor's approval clause in the contract and if not ask for it to be added. It is essential that your solicitor approve the Sale and Purchase Agreement.
Find out what changes, if any, can be made. Your solicitor will want to know where the deposit will be held, preferably in a trust account, so you earn interest on the deposit. Also how long is the conditional period?
If there is a sunset clause (when the development will be finished) and what happens if extra time is needed. Extra time can go from a time period of two or three years to five and beyond. Otherwise you can have your full deposit refunded the sunset clause has expired.
The Agreement is specifically written to favour the developer. Most contracts allow the developer to make changes without your consent, even altering the physical size of the apartment by up to five percent. Other changes could include changing the layout, the materials used and finishes.
You will also need legal advice concerning the Body Corporate, every apartment building has different arrangements. There is no one size fits all when assessing each building, all the documentation like Annual General Meeting minutes need to be carefully considered.
The Body Corporate
Thoroughly investigate the Body Corporate and examine the Rules. Ensure that the annual levies are realistic to cover the ongoing and long term maintenance costs. What restrictions do the Rules have regarding pets, use of the common areas, policies about noise, safety and security.
Essentially you need to know:
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