Watching Values Being Washed Away

You have to feel for the folk at Haumoana, Hawkes Bay (3 hours drive south of Gisborne). This week’s high seas have really taken a toll on their properties, literally washing them away. It seems that whenever there is a high sea running, this area really takes a hammering. I wonder how many other coastal developments around the country are at risk? Watch the video here.

This article was reported in the Dominion Post. By MARTY SHARPE and DIANE JOYCE

Sea-front residents woke to smashing windows and six-metre waves in the worst Hawke’s Bay tidal surges in more than a decade.

But despite warnings to evacuate by police and Civil Defence, many residents refused to budge.

The waves, some as high as a house, smashed into the shore at Haumoana and Ocean Beach overnight on Sunday and again yesterday afternoon. Residents were again advised to stay away overnight with high tide expected to bring more damaging surges about 1pm today.

Chloe Edwards and her father, Kevin Ambler, dragged furniture stored in their sea-front garage to safety just before midnight on Sunday.

The concrete garage floor broke off an hour later and fell into the sea. As they grabbed boxes the sea came up through the floor, Mr Edwards said. “It was shocking.” Their next-door neighbour’s house was knee-deep in water, as the sea washed around the house and into the front door. Houses several doors down had windows broken by the force of the waves.

Mark Kennedy arrived home from hunting to find a living area of his bach knee-deep in water.

Having lived through monster waves several times in the past eight years, he waded through to a higher floor and went to bed. “What can you do … this is what happens.”

He surveyed his backyard yesterday. “Nice beach, nice view, it’s just that it’s getting closer and closer.”

Police and Civil Defence personnel went door-to-door yesterday advising residents to evacuate.

Ten people at Haumoana and four at Ocean Beach fled their homes. However, most stayed, saying yesterday’s waves were nothing compared to the previous night.

John Bridgeman, who has lived on the coast for 25 years, said they were the worst waves he had seen.

“Just in terms of size and frequency. She was pretty bad on Sunday night.”

Twenty-one Haumoana houses remain at the most vulnerable piece of coastline, which has eroded away over decades.

Insurance companies now refuse to insure several houses because of the risk of inundation and erosion.

Mark Lawrence, who was convicted and fined $3000 for building a 3m-high seawall without a building consent, said his house and several others would have been washed away on Sunday night if the wall was not there.

“It’s just a shame the council didn’t let me finish it.

“If it was a bit higher, it would have kept all the gravel off our yard.”

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Top End Properties Are Selling Well

Houses in the  the top end of the local market appear to be selling well. The February sales data received to date, shows there were 7 sales over $500,000 –  the same number as the previous 3 month period combined. This may be cold comfort for those sellers who have yet to sell. But it does highlight the competitive market sellers are facing. Properties that are priced right are selling. Also of interest is what is happening at the low end of the market. View this week’s video for  the market update.YouTube Preview Image

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Property Update for February 2010

YouTube Preview ImageHouses for sale in Gisborne New Zealand. What is happening in Gisborne lately? Watch this video to see just what the residential property market is doing. To see a selection of houses that are currently for sale in Gisborne follow this link. Or if you would like an update of hot property – recently listed and recently sold, then follow this link.

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Costly House Sale Dispute Continues

A high-profile legal scrap over the sale of a clifftop Auckland house is headed for the Supreme Court in an attempt to end a dispute which started four years ago.

In 2004, the family trust of Mark Moncrieff Stevens and Deborah Ruth Stevens sold their house at 23D Beach Rd in Castor Bay to a speculator, named in the official documents as Mr Larsen of Mahoenui Valley Trust.

The house was sold for $2,575,000, even though the Stevenses had initially wanted much more and noticed that 27 Beach Rd sold for $3.2 million in September 2003.

Premium boss Brian Guy, his son Lewis Guy and agent Pamela Riley acted for the Stevenses on the sale.

About six months later, the Mahoenui trust sold the house via a Bayleys agent for $3,555,000.

Riley brought Mahoenui’s offer to the Stevenses and acted for the trust on the resale, which netted a $1 million quick-fire profit.

The Stevenses found out later that Riley was closely associated with Mahoenui. She had acted for it on many other deals and her daughter had also worked for the trust.

Although she told the Stevenses she had previously dealt with Larsen, she did not tell them his modus operandi was that he might resell the property within a short space of time.

So the Stevenses and fellow trustee Melva Beatrice Walker took action in 2006 in the High Court at Auckland, claiming breach of contract, negligence, misleading and deceptive conduct in breach of the Fair Trading Act and breach of fiduciary duty.

Premium had led them to believe the property was worth less than its fair market value, failed to disclose it had acted for Larsen before, failed to say the trust was buying the house for resale and failed to advise them of Larsen’s background, they claimed.

Although Justice Patricia Courtney rejected the main thrust of the Stevenses’ case, she found Premium guilty of misleading and deceptive conduct and breach of fiduciary duty.

Premium was in a position of “actual or potential conflict of interest and failed to disclose material information, namely the purchaser’s modus operandi”, she found. Expert valuation evidence found the house was worth $3.57 million at the time of sale.

“The relationship between Ms Riley and Mr Larsen created an actual conflict between the Stevenses’ interests and those of both Premium and Mr Larsen,” she ruled, awarding the Stevenses more than $1 million: $675,000 for the extent of the under-value at which the property was sold, $337,500 for the loss suffered for Premium’s misleading and deceptive conduct, and $67,050 for the commission on the sale.

But that was not the end of litigation. In April this year, both the Stevenses and Premium went to the Court of Appeal. Premium said Justice Courtney was wrong to disregard market evidence, particularly that there was no buyer willing to pay more than $2.5 million for the house. She misinterpreted valuation evidence and Premium was not obliged to tell the Stevenses about Larsen’s modus operandi, the agency claimed.
Premium said its non-disclosure of Larsen’s modus operandi was not the cause of any loss. Larsen’s offer was simply the best available at the time.

The Stevenses had bought a place in Parnell and needed to sell their North Shore house to complete the purchase, Premium said in its appeal.

“They made their own decision to accept the offer, notwithstanding their view [and Premium's view] that the property was worth more,” Premium said in its appeal. Premium cited a valuation by Trish Freeborn of Sheldons who in May 2004 found the property was worth $3.57 million.

When Larsen engaged Riley to sell the property, Premium conducted what it acknowledged to the Court of Appeal was “an aggressive marketing campaign, based on a price guide of $3.8 million to $4.8 million, which was supported by the Sheldons valuation of $3.57 million”.

Premium acknowledged that Riley knew Larsen was “an aggressive negotiator and a speculator prepared to take risks in the market. Premium said in its appeal that she further knew that Mr Larsen might suggest that he was purchasing a property for use as a personal residence but instead relist it soon after purchasing at a higher price.”

The Court of Appeal’s Justice Terence Arnold upheld the High Court ruling that Premium’s actions had breached its legal obligations to the Stevenses.

But he dismissed the Stevenses’ cross-appeal and cut the huge damages award against Premium to just $225,000.

He ordered the Stevenses to pay $3000 to Premium.

On July 29, the Supreme Court in Wellington granted both parties leave to appeal. Justices Peter Blanchard, Andrew Tipping, John McGrath, Sian Elias and Noel Anderson will hear the matter, set down for two days from November 13.

The Supreme Court is required to decide whether Premium was in breach of fiduciary duty and the Fair Trading Act because of its failure to disclose to the Stevenses that Larsen of the trust made a practice of buying and selling properties.

The court is also being asked to decide whether Premium is liable to pay an amount equivalent to all or any part of the profit made by the trust or alternatively whether the Court of Appeal adopted the correct approach in its assessment of damages and whether it correctly fixed the quantum of damages.

Ann Gibson NZ Herald

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Multiplex fund sheds value

One of New Zealand’s largest real estate funds has shed value.

The Sydney-managed Multiplex New Zealand Property Fund owned property valued at $701.9 million in June but this week it declared that had now shrunk to $655.4 million.

Leon Boyatzis, fund manager of Brookfield Multiplex in Australia, said a $21 million Wiri property had been sold, which brought the portfolio value down to $680 million.

The rest of the drop came after the fund’s real estate was revalued, he said.

The fund this week released accounts for the half-year. It owns some of the country’s largest and most valuable office towers, including the ASB Bank Centre on Albert St in Auckland and the Gen-i Tower on Wyndham St, where Brookfield Multiplex has its New Zealand headquarters.

The fund’s accounts show a net after-tax loss of A$7.1 million ($9.14 million) for the December half, compared to a A$78 million loss in the previous corresponding period.

The fund, which has not paid its investors dividends for 18 months, owns 17 properties and earned A$37 million total revenue during the half, compared with A$39 million previously.

Any cash earned is being used to repay debt and for essential maintenance and capital expenditure.
CCID: 29320

The Wiri property, on the books at $21 million, was sold in October for $19 million, and the fund is now trying to sell other properties to repay debt.

Story by Anne Gibson NZ Herald

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What is my house worth?

When I am talking with owners who have a house for sale, this is a question I am often asked and the answer that I’d like to say most often is “not as much as you think.”

It’s always the same. When we are selling, we tend to over value property, but when we are buying we  tend to have a more accurate picture of where a particular property sits,  value wise. Then we try to buy it for as little as possible! That is just human nature.

What is the value of a Superman comic book? Try $1,400,000!  It’s true, that’s what a rare comic book sold for recently. While comic books are not houses, there are some parallels between the two. Both share a common principle. Value is determined by what someone is willing to pay for something, in order to take ownership of it. Note this, the seller has no part in setting value. She or he has only one of two options. To either sell it now, thereby accepting market value or choosing not to sell it and waiting until the market value rises (no one waits until it drops).

When you come to think of it, all markets are like this. Food, clothes, petrol, jewellery, shares and stocks, even rare comic books and everyday houses …

It all comes down to supply and demand. Simple economics will tell you the basics.  Short supply tends to increase value. That’s why the rare comic book sold for a record price. On the other hand, seasonal fruit can be purchased cheaply.

Demand also plays a big part. When there is little or no demand, the value drops.

Back to the original question: What is my house worth? It depends on who is out there and what they are willing to pay. Remember too, it is likely that there are other houses for sale near yours, so buyers can choose to buy something else or not buy at all. But really, deep down we already know this. It’s just that we don’t want to feel like that we are practically giving it away.

And of course, we hope it’s worth more than a comic book … (or is it?)

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Lowest Month of Reported Sales

What happened during January? Not a lot actually, if the reported residential sales are accurate. January 2010 saw the lowest number of house sales in Gisborne NZ for quite some time. Why? I have a few thoughts on the matter. Firstly the market we are currently in here in Gisborne is not running hot. Sales over the past 6 months have been low and while we we hit 40 plus in December 2009, that was the exception, not the rule. Investor confidence understandably has been at a low point, but that will change. Economic uncertainty – business confidence, unemployment and general caution have all factored to the drop in sales volumes.

Secondly most agents took a break. You could argue they do that every year and the sales didn’t drop as much then. But looking at the numbers – high in December – meant a lot of stock was cleared out and may not have been replaced prior to Christmas. Agents took a break, came back to work, not a lot in the market, fewer sales. If February sales are up, then this may prove to be true. Remember too, sellers and buyers go on holiday also.

Thirdly, some agencies may not have submitted their stats. With the change in the industry’s laws and regulations it is no longer compulsory for agencies to belong to the REINZ. It is possible that some agencies have elected not to forward their statistics.

So what does it all mean for the players? For Sellers, it means they are in competition with other home owners who are wanting to get the buyer under contract . Sellers need to be sure their property is an attractive proposition, either in features offered, presentation or most importantly, it is competitively priced. Sellers are never in isolation, with just their property on the market, but rather they are in competition with other home owners.

For Buyers, this market signals real opportunity. In any market there are always genuine sellers willing to meet the market, who need to sell. With the low level of competition from other buyers who are apparently not committing, this is a great time to make your move.

I thinks we’ll see a lift in February’s activity.

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John Key’s announcement good for local investors

Good news for those who have  holding off getting into the property investment business. It looks as though the government appreciates that any bold move to tax landlords to the extent that the working party had suggested would have had negative effects on the rental house market and tenants. Investors can now move forward and take advantage of the current climate that favours residential property investment.

This article appeared in Tuesday’s New Zealand Herald.

The vice-president of the Property Investors Federation is relieved that most housing tax options were ruled out in Prime Minister John Key’s speech yesterday, but he is wary of what is to come.

Andrew King said Key had erred on the side of caution and been politically astute.

“It’s what we expected but it’s nice to hear it,” King said in reaction to Key’s speech to the House shunning most of the Tax Working Group’s advice to hammer landlords.

Key ruled out a 0.5 per cent land tax which would net $2.3 billion annually and a capital gains tax and said there would be no introduction of a recommended scheme to tax rental income at the equivalent of a risk-free rate of return, pulling $500 million-$900 million a year.

King said most landlords hoped Key would not implement the Tax Working Group’s recommendations which floated these ideas.

As for the May Budget, King said he was not too concerned and predicted only one change to the system.

“I think he’s going along the lines of disallowing building depreciation.

I can’t see him banning Loss Attributing Qualifying Companies because the biggest users of those are forestry businesses. All banning those would do would mean residential investors would own properties in their own names and they would still get the same tax deductions,” King said.

Axing building depreciation would bring in about $1.3 billion annually, the working group predicted.

King remains disappointed and angry about the group’s report, saying it undermined the $200 billion residential property sector, created widespread misconceptions and skewed information which stirred up anti-landlord sentiment.

He cited a sub-report to the group from Inland Revenue and Treasury which said that in the last 28 years, landlords had paid tax every year except 2007 and 2008 when interest rates were so high that they claimed deductions on mortgage costs.

“The working group’s report is misguided. It is not as thorough as it should be,” King said.

But John Shewan – group member, landlord and Pricewaterhousecoopers chairman – said some multimillionaire landlords qualified as state beneficiaries because they appeared poor on paper.

He said the $200 billion tied up in residential rental property was four times the capitalisation of the NZX yet resulted in negative tax.

Lee Whiley, an Auckland landlord, is worried about disallowing depreciation and predicted this could halve his annual income from six properties.

Key released little about the Government’s tax plans but said landlords would be made to pay their share.

“The Government does believe there is a gap in the current tax system around property investments where income is being derived but, in aggregate, no tax is being paid – in fact the Government is actually losing revenue in this sector,” Key said.

“We will therefore be making changes [in the Budget] to the way property is taxed which will result in … more fairness for taxpayers.”

- Ann Gibson – New Zealand Herald

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Good Real Estate is always in demand

102 Stafford Street

There’s no denying it. When it comes to houses for sale in Gisborne NZ, the same universal truths hold firm. The golden rule of real estate, “buy the worst house in the best street” is a common belief held by many buyers and that was evident on this occasion. That’s a bit unkind on this property, but let’s say  there was room to add more value. At yesterday’s auction at 102 Stafford Street, Gisborne a crowd of 40 people gathered on the lawn of the 1910’s villa and bid strongly for this classic villa. “Buyers saw the potential in the property and were excited with the possibilities” said agent Tracy Bristow. The four week marketing programme saw over 50 parties through the property. On the day it came down to 4 bidders showing their hand. Starting low at $200,000 auctioneer Neil Walker opened the bidding and from there it quickly went to $285,000. After a brief discussion with the highest bidder and the owner on the phone, the bid was increased to $310,000 and offered to the folk gathered, before it was sold under the hammer. The owner was please with the outcome. The new owners intend to move in, renovate and restore the property to it’s former glory.

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Ten Ways to Increase the Saleability of your Home

When it comes to selling your home, first impressions are most important.
By making your home more presentable you are more likely to achieve a sale quicker and at a good price.

Here are ten suggestions to improve your chances.

  • Mow the lawns, trim the shrubs.
  • Take the rubbish to the tip, particularly all that junk behind the garage!
  • Take some clothes to Red Cross. Get rid of all the items you haven’t worn for ages (you would be amazed with how much clothing people leave lying around the house).
  • Get rid of clutter. You may not see it in the lounge, but others do. If you can’t bring yourself to throw it out, store it in boxes in the garage.
  • Clean out the garage. Sweep up, throw out and store away neatly stuff you want to keep.
  • Wipe the kitchen cupboard doors and clean the stove.
  • Wash the dog and clean where she/he sleeps, pick up the doggie doodle from the lawn.
  • Have a nice fragrance in the house (nice cooking, flowers, incense).
  • Clean the windows, wash the house down.
  • If it is cold outside, light the fire, people will feel warm and homely.

For more information on what to do when selling your home, please visit Walker Real Estate.

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