Like all advice, it’s great to give but terrible to receive. That’s our warning before you read on. This Barometer is filled with the things we all know we should do, but put off.
Long time consumers of the Barometer will have read many of my rants regarding deferred maintenance. The thing is, when the buyers have FOMO and the market is in full swing they overlook physical depreciation. This is because they know property value growth will outstrip the cost of repairs. Now that the market has changed, deferred maintenance has become a significant issue. So, it’s time to get on top of it. Perhaps you have no thoughts of selling? Maybe your timeframe is five years, possibly ten. But one thing’s for sure – proactive maintenance of your property will set you in good stead whenever the time comes. Then also, if circumstances change unexpectedly, and they do, you’re not left scrambling.
Capital Improvement vs. Maintenance
There is a distinct difference between capital improvement and maintenance. Even the IRD acknowledge this. Replacing your roof or painting the exterior is maintaining the property, while replacing bathrooms and kitchens is an attempt at capital improvement. It’s not uncommon for vendors to advertise their property stating that the roof is new. While this is nice, buyers obviously expect the dwelling to keep the elements out, so they don’t usually put more value on the fact it has been replaced. Buyers see deferred maintenance as a cost. In this market they either discount their offers in line with the level of maintenance or simply walk away. The latter is more common.
If you own a home constructed pre-1930’s, it may be supported by Totara piles. The problem with totara piles is that they can appear to be in good condition but can be rotting below ground. As a result, most totara piles are now well past their use by date. If you are aware your piles are totara it would be well worth looking to upgrade. This is expensive work although it will likely become a big problem when you come to sell. This has a lot to do with insurance companies and their reluctance to reinsure. No insurance, no mortgage.
The next issue with foundations is concrete cancer or spalling. This is becoming more common with reinforced ring foundations and piles used during the 1940’s, 50’s and 60’s. If you notice steel rods have become exposed, it would be advisable to engage a concrete specialist and address the issue while it is still manageable. If foundation work gets away on you then you will have a major issue maintaining a good foundation platform for the property.
Just like a new car exterior, no sooner have you finished painting then it starts to depreciate. Exterior cladding is designed to keep the elements out. New Zealand, and in particular Wellington, have extreme weather conditions. Vertical wind, rain and burning sun put our cladding systems under pressure. If you haven’t painted within the last 10-12 years, it is likely your cladding is more prone to water ingress and potential damage to the cladding materials. A word to those looking to undertake an exterior paint: success lies in the prep work, so be sure to question your painter about just what prep work their quote covers. To extend the longevity of you paint work, it is advisable to wash your house down annually.
Wiring is an issue for insurance companies. Older wiring has been known to cause fires which in turn leads to insurance claims. If you reside in a property build prior to the 1960’s and no upgrades have taken place you may struggle to sell. Electricians can quickly inspect and advise on the existence of old wiring. Anything which doesn’t meet current code would be best replaced while time is a luxury.
Plumbing is one of those annoying and often unseen problems. With most pipes hidden in walls or underground you normally only become aware of an issue when something goes wrong. Very few people check the overall plumbing function of a property. The primary focus from buyers is whether a property has “Dux Quest” (1970’s, 1980’s black piping used in new homes and renovations). Some older homes may have clay pipes which, much like the Wellington water infrastructure, are now well past their economic lifespan. The studious buyer is now investigating pipe work and this may include using cameras to look at the function of the pipes.
Create a 10-year maintenance plan and chip away
One benefit of the change to the Unit Titles Act was the requirement to establish a long-term maintenance plan. This is funded through a regular contribution by way of body corporate fees. As a property owner you could take a similar approach by identifying the key maintenance requirements over the coming decade and start saving towards addressing these matters prior to them becoming major problems. After all, a well maintained house attracts a premium, whatever the market.
The Wellington Market
Whether selling or renting there seems to be plenty of options available. Properties for sale are hovering somewhere between 800-900. The higher stock levels are not necessarily because of more stock to the market, but the fact properties that are taking longer to sell with many vendors holding out hope for a better outcome.
A brief reflection on the dizzying heights we have fallen from. In June 2021 New Zealand topped Bloomberg’s Economic risk radar for being the most unaffordable housing market in the world. A quote from the organisation in July 2021 “Judging by the dunger that sold for $1.8 million ($1.3 million USD) in January, quality is no obstacle — and neither is price.”
Wellington Market Quick Stats
What’s on this July in Wellington?
Come Together – Fleetwood Mac’s Rumours, 7 July, The Opera House
Off the back of two popular album concert tours, Goodbye Yellow Brick Road and Sticky Fingers, the team at Come Together have created another stellar musical experience.
On a global scale, Fleetwood Mac sold more than 40 million copies of the album Rumours. With tracks “Dreams”, “The Chain”, “Don’t Stop” and “Go Your Own Way”, this iconic album was written during a turbulent time for the band and has gone on to become part of the fabric of music history. The songs bring together fans old and new, and are still adored today.
The Original Harlem Globetrotters, 17 July, TSB Arena
Spread Game. It’s what the Harlem Globetrotters do best.
For those new to this sensation, the Harlem Globetrotters’ “Spread Game” is the basketball wizardry these athletes display night after night. For over 95 years, the Harlem Globetrotters have been committed to spreading joy through their artful athleticism and unparalleled basketball skill.
Girl From The North Country, 21 – 31 July, The Opera House
Featuring the masterful music and lyrics of Bob Dylan comes the musical ‘Girl from the North Country’. Described as the number-one musical show of the year, the show opens at the Opera House on 21 July.
This musical theatre masterpiece features the music of Bob Dylan and is written and directed by celebrated Irish playwright Conor McPherson. A tale of heartache, endurance, secrets, and second chances, the story takes audiences to Minnesota in 1934, and into a community living in the midst of the Great Depression. Entering a rundown guesthouse we’re invited into the lives of those who reside there and arrive throughout the course of the play.