Hive News Friday: Wellington building woes mount; Insurers 'un-freeze' property deals; Better LINZ data by May

Statistics NZ House. Copyright Bernard Hickey / Hive News

The reality of the significant quake damage done to some of Wellington's largest commercial buildings is now dawning on the capital.

Two major buildings -- 61 Molesworth St and the Reading Cinema carpark adjacent to Courtenay Place -- face demolition because of structural damage. Three other buildings -- Defence HQ on Aitken St and Statistics NZ House and the BNZ Building on the waterfront -- face repairs that could see them uninhabitable for up to a year. Archives House was also evacuated yesterday. Major thoroughfares such as Molesworth St and sections of Tory St and Courtenay Place could be cordoned off for months, given the risk of collapse and the need for 'deconstruction'.

Reflecting the surprise at how many apparently modern buildings had problems, Nick Smith announced an MBIE investigation yesterday. The investigation is into Statistics NZ house in particular, but could widen.

"This investigation will focus on Statistics House to understand its performance and where there may be wider lessons for improved design," Smith said.

"My advice from officials is that the vast bulk of Wellington buildings have performed well but if information comes to hand on other issues related to seismic performance, the investigation may be widened," he said.

CentrePort and KiwiRail face the biggest financial hits from the earthquake, with CentrePort facing ongoing losses from closures of parts of the port and potential write-downs on its BNZ and Statistics NZ buildings, while KiwiRail faces operating losses on its truncated ferry services and the closure of the main trunk line through Kaikoura for as long as a year, not to mention the massive capital costs of the rail rebuild north and south of Kaikoura.

Insurance 'freeze' on property deals unfrozen

The Insurance Council scrambled yesterday to 'unfreeze' the moratorium on rolling over insurance cover from property vendors to buyers.

Operations Manager Terry Jordan said late yesterday he had negotiated an urgent 'un-freezing' of the moratorium, although insurers still retained the right to refuse insurance to buyers with criminal records or signs of fraud.

"We've confirmed with almost all the insurers that they will consider insuring the purchaser where their vendor is selling," Jordan told me, adding that some would require new building reports.

Tall Poppy Director Sam McIntyre said on Wednesday afternoon that three home sales his firm was handling in the Hutt Valley had stalled before settlement on Monday and Tuesday, while another sale in Palmerston North had also been put on hold because of the embargo being applied by insurers.

Insurers were refusing to offer new cover to buyers until they could provide a new builders' report done after the earthquakes, which meant the deals were stalled, given mortgages could not be issued without insurance, he said.

McIntyre told me yesterday afternoon that one of the three frozen deals had been unfrozen when an insurer had changed its policy back to allowing roll-overs in the wake of the industry-wide deal, but there was still uncertainty with other insurers.

"We managed to get one of the agreements across the line, but it's still a bit of a lucky dip," he said.

Kaikoura support package launched

Meanwhile, Steven Joyce and Anne Tolley announced a support package for small businesses and said the Government was considering supporting some bigger businesses that faced major disruptions over the key summer period because of the closure of State Highway 1 for several months.

They said businesses with less than 20 employees could apply for wage subsidy grants of up to NZ$500 per week per employee for an initial period of eight weeks, backdated to Monday. The package is designed to allow businesses to keep employing people while they recover and was used successfully after the Christchurch earthquakes of 2011.

They said the complete closure of State Highway One to the north and south of Kaikoura had stranded businesses in Kaikoura and surrounding areas.

"The road is unlikely to open for many weeks and possibly months," Joyce said.

"On top of that, the earthquake has had a massive negative effect on the fisheries industry in the district. It is clear that if we don't move quickly, much of the employment in the area will dry up," he said.

Joyce and Tolley told a news conference in Parliament they may extend the package beyond six weeks if needed, and they were also open to providing other support to businesses with more than 20 employees.

The employment subsidy would be available for businesses in Kaikoura, Cheviot, Waiau, Rotherham, Mt Lyford and Ward which face a dramatic drop in their turnover as a direct result of the earthquakes and the closure of State Highway One, they said.

Joyce said up to 1,000 employees worked in and around the Kaikoura area and the NZ$7.5 million package would support them while the state of the roads were assessed and more information was gathered about how long it would take for the road and rail to be opened.

"The unique circumstances here are that these settlements are on a road that has been severely damaged and a coastline which has been massively altered. Nobody yet knows when their livelihoods will be restored," he said.

Ministers would review the scheme before Christmas, including whether to extend the subsidy in length and whether it should be expanded to other areas.

The scheme will be administered through the Ministry of Social Development, with support from the Canterbury Employers Chamber of Commerce, Enterprise North Canterbury, and the Kaikoura and Hurunui District Councils.

Firms holding insurance cover for loss of earnings would be expected to use this before accessing the wage subsidy, Joyce and Tolley said. A separate support package for farmers would be announced by Nathan Guy with a few days, they said.

LINZ expects updated survey results in May

Elsewhere, the debate over foreign buying of houses was stirred again yesterday by a fresh set of quarterly data from Land and Information NZ (LINZ) on the tax residency status of property buyers.

The percentage of property buyers who said they were non-residents for tax purposes was unchanged at 3% in the September quarter, but LINZ again said it still could not say what proportion of the other 97% were not permanent residents because they held a temporary work or student visas.

LINZ said it was continuing to re-design the survey questions designed to find out whether buyers were citizens and permanent residents, or whether they held temporary work or student visas. LINZ has a survey question which currently allows both permanent residents and non-permanent residents to identify themselves as students or having temporary visas, meaning the results cannot be used.

LINZ said it expect to confirm the redesigned survey question in December after consulting with lawyers and conveyancers and changing its IT systems. It would conduct the redesigned survey after the March quarter, which meant the first results to break out the portion of buyers who were students or temporary workers would be released in May next year.

The September quarter survey found 3% or 1,431 of the 53,991 property transfers registered in the September were to buyers who identified themselves as being foreign tax residents, including 471 from China, 336 from Australia and 69 from Britain. The percentage of buyers of Auckland properties who were not New Zealand tax residents was also unchanged at 4%.

LINZ did not release the proportion of respondents who said they were on student or work visas.

"While we have also asked buyers with work or student visas whether they intend to live on the land they have purchased, analysis has shown that the results for this question are not accurate," LINZ said.

Louise Upston said the data disproved Opposition claims of substantial foreign buying of properties.

“This latest report, although based solely on tax data, does not support the opposition rhetoric of mass purchases by foreigners. The data for both buyers and sellers showed overseas tax residents involved in just three percent of both types of transfer,” Upston said.

Phil Twyford said the figures were "dodgy" and the Government should stop "fiddling with the statitistics and give an honest account of the number of New Zealand homes being bought by foreign speculators."

“Last time, National’s cooked-up foreign buyer numbers were laughed off the stage because they excluded foreign investors in New Zealand on temporary work and study visas," he said.

“Now, to hide their embarrassment, they are saying the number of foreign buyers on temporary visas shouldn’t be used and have omitted it from the main data. National should stop mucking around with the stats. The public want full and transparent figures showing the number of non-resident non-citizens who are buying houses here."

In other economic and financial news...

Fonterra announced this morning it had increased its forecast payout for the current 2016/17 season from NZ$5.25/kg to NZ$6/kg. "We’ve seen falling production in the major exporting regions, particularly Europe and Australia, and an unprecedented decline in New Zealand milk supply due to wetter than normal spring conditions across most regions. On balance, demand continues to be firm. As a result there has been a steady improvement in global dairy commodity prices and this is reflected in the improved forecast," Chairman John Wilson said.

Have a great weekend and check out a great crop of Weekend Reads below.

cheers

Bernard

18 November 2016