Jim Davis, Harcourts Christchurch/South Island Regional Manager, shares his latest view on the property market in Christchurch.

The release of the latest REINZ data for the month of January will no doubt bring some huge headlines in the media over the coming weeks. In fairness the hard data does not look good, depending on which aspect of the market you are most interested in.

Up until now, the major effects of the economic downturn have been felt mainly across the north Island. However, looking at the January figures for Christchurch, you can feel that the impact is starting to bite here a little more as well.

The announced result of 246 sales across all Christchurch city for the month of January is the second slowest month on record, only beaten by the result immediately following the earthquakes. In reality January is always a slow month and sales numbers are usually low, purely because the country is pretty much on holiday then. However, the stats as I have said, tell us this one was worse than usual. This trend has been growing in recent months where we have been seeing that sales volumes slip away as the market has reacted to all the media commentary, the economic situation and associated warnings.

When sales volumes drop we also typically see a drop in prices, and the reduction of the Christchurch city median to

$622,000 reflects this. Once again we don’t really know if this low median actually reflects the overall current market reality going forward, or whether it’s an aberration as a result of low sales volumes. I did say back in December that we won’t get a real reading on the state of our local market until this same time next month when the February figures are released. Both the January result and to a certain extent December are impacted especially by annual holiday season inactivity, but in February we settle back into the real market – once the schools are back.

Locally here in Christchurch Harcourts sales results for our team are rather interesting for this last month.

We still have the same number of consultants running round the city as we did in January last year and surprisingly we listed exactly the same number of properties this January compared to last. However, we had a drop off in the number of Auctions listed vs other methods. The amount of listed property we have on hand as stock, has started to climb a bit more lately as we have maintained listing numbers – but experienced the market drop in sales volumes. Currently we have some 1400 or so properties as stock on hand, but that number is still considerably less than the levels that were typical pre- covid. In terms of properties sold in January, we sold 12% more this January than we did in the corresponding month last year (note: against the market trend). Like the market, what stock we did sell was hit by values, and we had a 7% drop in average sale price over all the property we sold in comparison to January 2022.

So what does all that mean for you if you are interested or thinking about engaging with the local Christchurch property market?

REINZ stats tell us that the whole market overall experienced a significant drop in sales numbers and median value in January. But Harcourts in Christchurch over the same period listed the same volume as last year and sold more than the previous year as well. This indicates we are outperforming and achieving more sales than our competitors at an increasing rate especially now when the overall market is tougher. More and more people entering the market are realising as the sales volumes shrink, if you want to increase your chances of a sale you need to be with Harcourts. There is no benefit looking at a “cheap and cheerful” option for sale in this climate, as its obviously not working that well in a lot of cases.

The strength of our numbers and our training is showing through in our increasingly dominant market share in these tougher times, and the results we are achieving no matter which way you look at it, are outstanding for our clients. If you are serious about selling, then we are the company to assist in this area as the statistics signify.

REINZ FIGURES

Median $622,000  |    Average $702,190

HARCOURTS FIGURES

Median $695,500   |    Average $776,627

But that was January. What’s happening now at the coalface, the troops are reporting that open homes are getting busier each week. A typical property might be getting anywhere from 20-30 people at their open homes. With exceptional properties still achieving 100 visitors or close to it occasionally. Its apparent that people are out there having a look and numbers are slowly growing. A media report last week mentioned a large increase in the volume of sales being madeto the first home buyer segment of the market as they start looking to take advantage of current prices, and this has been reinforced by a number of our consultants.

There is no doubt that the investor market is still holding off, but first home buyers as mentioned, are starting to swing into action or thinking about it, especially now that there are small signs that we might be seeing interest rates top out soon. Looking at current rates, most banks have created an incentive to lock in two years. I also think that the indication a few banks have started to drop their 5-year rate supports the theory that perhaps rates are at or close to the top of the curve. I heardanother media commentator mention they had heard banks are struggling to meet their own internal lending targets with the drop off in sales, so there are definitely deals to be had in the finance world if you are talking to the right people.

On that point if you are a serious buyer in the current market, I suggest you ensure you are talking with a Mortgage Advisor to ensure you are seeing as many of the available loan options as possible. As a potential buyer I think you should utilize all the help you can when securing a loan and to also ensure you are getting the best deal around that suits you.

Another widely touted view is that there is sometimes a standoff happening between some vendors and purchasers. While this can happen with people who either don’t need to sell or people who don’t need to buy, it has to be said that some offers are so out of kilter, they can almost be seen as insulting by some owners.

It’s commonly said that the market is now in a “buyers’ market” phase, and property can almost be considered, to be “on sale” now in comparison to a year or so ago. So, if you are not buying now when property is “on sale” when will you buy or rather what else are you waiting for? If you’rewaiting for the bottom of the market, please let us all know when that will happen, because most of us never get that right.

For those of you who are in the market or are thinking about stepping into the market for whatever reason, give your local Harcourts office a call. We really are confident that we are your best chance at getting you the result you want in these ever-changing times.

Happy New Year

Welcome, 2023! With everything we experienced in 2022, we know it is likely to be another year full of challenges and change. The team from Harcourts Property Management are excited about the opportunities that 2023 will bring, and would like to wish you all a happy, healthy, and prosperous year ahead.

The Cost of Filing Tenancy Tribunal Applications

At a recent Tenancy Tribunal hearing, a landlord made a claim against the tenant for rent arrears, costs such as cleaning, and costs associated with alleged methamphetamine contamination of the premises.

The landlord claimed that the premises were damaged by methamphetamine contamination during the tenancy to the extent that the premises were not habitable and needed to be decontaminated. However, no methamphetamine test was conducted immediately before the tenancy began and a pre-tenancy test is usually required for the landlord to establish if the premises were contaminated prior to the tenant moving in.

There are other means to prove contamination if a pre-tenancy methamphetamine test was not conducted, however, the evidence must be compelling. For this particular case, there was no evidence provided to suggest that the current tenant was responsible for the methamphetamine contamination of the property.

Due to the seriousness of the allegations, the tenants engaged legal counsel. As the tenant was represented by legal counsel, the Tribunal had the power to award costs.

The tenants, represented by legal counsel, filed a memorandum seeking costs and the Tribunal made an award of $2,500 to the tenant. This amount was awarded firstly, due to the serious allegations that methamphetamine was used, and possibly manufactured on the premises, and that the landlord made this application without considering what evidence was required to prove it.

econdly, because the tenant was largely successful against all the allegations claimed by the landlord, the tenant had their name and identifying details suppressed from the Tenancy Tribunal order.

A landlord must consider the validity of any allegation and what evidence they have before making an application to Tenancy Tribunal. Property managers should advise landlords on the possible success of any claims and provide a professional opinion as to whether they should proceed. There may be times when a property manager declines to represent a landlord if the case does not have legitimacy.

When extensive alterations, refurbishment, repairs, or redevelopment are required

Section 51 of the Residential Tenancies Act – Termination by Notice

A landlord may terminate a periodic tenancy, or a fixed term tenancy on or after the end date, by giving at least 90 days notice if:

Extensive alterations, refurbishment, repairs, or redevelopment of the premises are to be carried out by the landlord or owner, and—

(i) it would not be reasonably practicable for the tenant to remain in occupation while the work is undertaken; and

(ii) the work is to begin, or material steps towards it are to be taken, within 90 days after the termination date.

What should be considered before terminating the tenancy using this provision in the Residential Tenancies Act 1986 (RTA)?

When considering extensive renovations to a property and potentially terminating a tenancy, consider first whether the work could be performed with the tenant living in the property, or if the tenant could simply move out for a short period of time.

If the tenant simply needed to vacate the premises for a short period of time, could they leave their belongings at the property or would they need to remove their belongings? In the case of renovating a bathroom, is there another bathroom that they have access to? In some cases, temporary bathrooms can be provided for the occupier to use during a bathroom renovation.

Consult with your tradespeople about whether it is practicable for your tenants and their belongings to stay in the property while the work is being carried out and how long the work will take. If it would be impractical for the tenant to stay, get this in writing, the reasons why, and how long the work is expected to take. You may be required to provide proof that the work was extensive enough to require the property to be vacant and the tenancy to terminate.

If the tenant can stay

If the tenant can stay at the property, consult with them about how long the work will take and what will be involved. Consider offering the tenant a rent reduction to compensate them for any inconvenience the renovation may cause. If they need to vacate for a short period of time and can do so, then the tenancy can continue. Landlords are not required to provide somewhere else for the tenants to stay, and tenants that move out while work is being performed are not required to pay rent until they are able to move back into the property. Any agreements that are made must be recorded in writing with all parties receiving a copy of the agreement.

Only give notice using this provision IF the notice is legitimate

Landlords and their property managers must not use this provision to terminate a tenancy if the reason is not legitimate, as they would be committing an unlawful act.

Landlords cannot act to terminate a tenancy without grounds

It is an unlawful act for a landlord to give notice to terminate a tenancy or apply to the Tribunal for termination knowing that they are not entitled to do so.
Retaliatory notice

A notice can be deemed ‘retaliatory’ if the Tribunal considers that the notice to terminate the tenancy is not legitimate and the motivation by the landlord is not for the reason stated. A ‘retaliatory notice’ is where a landlord gives notice to a tenant to end a tenancy in retaliation for a tenant standing up for their rights. For example, if the tenant made a complaint about the tenancy such as requesting maintenance to be carried out.

It is an unlawful act for a landlord to issue either a termination notice without grounds or to issue a retaliatory notice. The Tenancy Tribunal can award exemplary damages payable to the tenant of up to $6,500.

Family Violence and Physical Assault Regulations

Provisions relating to family violence and physical assault are in force. Regulations to support these changes were finalised on 1 December 2022 and came into effect on 29 December 2022.

These regulations enable:

• tenants to withdraw from a tenancy by giving at least 2 days’ written notice to a landlord where a tenant has been subjected to family violence – while a tenant
• landlords to terminate a tenancy with 14 days’ written notice where the tenant physically assaults the landlord, the owner, a member of the landlord’s or owners’ family, or the landlord’s agent.

Family Violence Regulations

If a tenant has been subjected to family violence, they can provide their landlord with at least two days written notice accompanied by qualifying evidence to withdraw from their tenancy.
Qualifying evidence of family violence can be:

• a statutory declaration from the withdrawing tenant
• a copy of the first page of a Protection Order
• a copy of a Police Safety Order
• a copy of a charging document relating to family violence against the withdrawing tenant or
• a written statement (such as a letter or email) or statutory declaration from a person specified as able to provide evidence of family violence.

These documents must have been issued or completed during the withdrawing tenant’s current tenancy to be used as evidence. Protection Orders issued earlier than this are also permitted if the withdrawing tenant also provides a written statement that they have been a victim of family violence while in their current tenancy.

When there are other tenants

If there are remaining tenants, the tenancy continues. The withdrawing tenant must give notice of the withdrawal to the other tenants no later than 2 days after their withdrawal from the tenancy. This does not have to be done in person, and no evidence of family violence or other information needs to be shared. A failure to notify any remaining tenants does not invalidate the withdrawal notice.

The amount of rent for which the remaining tenants are liable is reduced for 14 days following the withdrawal. This is based on the number of tenants at the property. After 14 days, the rent will return to the normal rent payable, as per the tenancy agreement.

Only the tenants, landlord or property manager will receive the statement or declaration, which they must keep confidential and can only disclose in very limited circumstances. A landlord may not challenge whether the family violence did or did not take place. If the documents are not completed properly or are not completed by a prescribed person, the landlord can challenge the notice by filing an application in the Tenancy Tribunal.

Physical Assault Regulations

If a landlord, owner or property manager has been physically assaulted by a tenant, or a member of their family has, they can end the tenancy with at least 14 days written notice accompanied by qualifying evidence.

Evidence can be in the form of a Police charging document in respect of the physical assault or a letter from Police that a charge has been filed in relation to the physical assault by the named tenant.

The landlord does not need to apply to the Tenancy Tribunal to end the tenancy, but they must give written notice that includes certain information and at least one form of evidence of the physical assault. When issuing the notice, the landlord must also advise the tenant in the notice that they have the right to challenge the notice through the Tenancy Tribunal. If a tenant challenges the notice of termination, the tenancy remains in place until the Tenancy Tribunal arrives at a decision.

What is physical assault?

Physical assault is defined as the act of intentionally applying force to the person of another, directly or indirectly.

Other actions a landlord can take

A landlord can apply to the Tenancy Tribunal to end a tenancy if the tenant has caused or threatened to cause substantial damage to the property or assaulted or threatened to assault certain people. These reasons also apply if the tenant causes or permits another person to do the same, for example an associate or family member. This type of application would be treated as an urgent application by the Tenancy Tribunal.

In addition, if a breach of a tenancy is incapable of remedy and is of such an extent that it would be inequitable to refuse to make an order terminating the tenancy, the Tenancy Tribunal may make an order to terminate the tenancy.

Tenancy Start and End Times

Tenancy days start and end at midnight, therefore we cannot demand that tenants leave the premises and return keys before midnight on the last day of a tenancy.

For example, if a tenant gives notice to vacate on the 15th of the month, they have possession of the premises until midnight on the 15th. To collect the keys at midnight is impractical, so we would expect the keys to be returned, or to meet the tenant, collect keys, and do a walk-through, on the morning of the 16th which is the morning after the termination date of the tenancy.

If you are selling your property or planning to move back in, you will need to keep this front of mind.

Always give your property manager several working days after a tenant has vacated to get a property inspected and up to standard before taking possession of the premises. This ensures that any issues that may arise at the end of a tenancy can be dealt with before settlement or the owner takes back possession of the property.

 

 

 

 

 

Jim Davis, Harcourts Christchurch/South Island Regional Manager, shares his latest view on the property market in Christchurch.

With just one week to go until Christmas day, it’s fair to say the interest in the property market locally will not be a high priority for most people over the next few weeks! However, for those of you who are in the market currently or perhaps are thinking about what your options and choices are over the holiday season then the following information may be helpful.

There are a lot of comments out in the marketplace currently and the current situation is best summed up by the following statement. “Buyers are again weighing up the likely impact on mortgage rates with current downward pressure on property prices. Those thinking of selling are again looking at the market and asking, ‘is this the right time?”

So, is this the right time?

All I can say is that you have all the information currently available, and all the information indicates that Harcourts in Christchurch should be the brand of your choice. The right time is when you are ready and if you are ready then now is as good a time as any. The bigger decision is choosing the right person and the right company to represent you. It’s interesting that even some of the builders and developers who previously did it all themselves are now asking Harcourts to help sell their stock. If you need any more convincing this data might help:

REINZ Figures:
Median $680,000
Average $767,140

Harcourts Figures:
Median $715,000
Average $790,433

You have all the facts; all you need to do is decide whether “the time is right now?”
If so, Harcourts is the logical choice.