Dalziel Lianne: Estimates Debate — In Committee 
Dalziel Lianne: Estimates Debate — In Committee 
[Advance Copy - Subject to minor change before inclusion in Bound Volume.] 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 I believe that the Government had a laudable aim when it committed to preserving homeowners’ equity in our badly damaged suburbs but given that that has not been possible with the offer the Government has made I really want the Minister in the chair the Minister for Canterbury Earthquake Recovery to say that that is the case—that the Government tried to preserve equity but has not been able to do so for a large number of people. 
The reason it is important for the Government to actually say that is that opinion polls have been run on the status of the Government’s offer. I know that Government members are all circulating little questionnaires in our Christchurch electorates at the moment to see what people think of the Government’s offer. I am worried about that because of course the constituents that I am dealing with who are in the red zone and who are having to face up to the reality of what that offer may mean for them are concerned that people are commenting on an offer believing it to be one thing when in fact they know it to be something quite different. 
The majority of homeowners certainly the ones whom I have spoken to in the red zone and who will be receiving the offer do not believe that this preserves equity for them at all. The ones who have expressed anxiety about what they will do in the face of the offer that they are soon to receive are virtually being told by the Government that they are ungrateful for feeling the way they do about what is generally perceived to be a fair balanced and reasonable offer—which is the language the Government members have used in the House. 
For some people that is the case. Members on this side absolutely accept that on average property prices fell by 5 percent from 2007 to 2010 and that therefore the property valuations as established in 2007 as a general rule should be more than people could have sold their property for on 3 September 2010. But unfortunately when one talks about averages across a country that does not always produce a very good result for individuals. 
Let me just talk about the four groups of people who are in this category. The first group are people who bought their homes when the market value exceeded the 2007 rating valuation. We have a number of constituents I know in our electorates who now will end up in a situation if they accept the Government offer of negative equity. They will owe the bank more than they will get from the Government offer. 
The second group are homeowners who cannot buy property without borrowing and who cannot afford to service a mortgage or who do not meet lending criteria. I could buy another house with the Government offer and I am probably in a position to accept the whole of the Government offer. Obviously I will wait till I see it in writing but I will probably do that. I have put on record my conflict of interest in that regard. I do fit within this category. But imagine if I were an 85-year-old widow in a freehold home that I had lived in all my life and raised my kids in and the property is worth only $250000. What can I buy for $250000? Not much I am afraid. That person will not be able to get a mortgage. So that is the second group. 
The third group are homeowners whose land component of their 2007 rating valuation does not represent the market value of an unimproved section and/or is insufficient to buy an equivalent-sized section in the current market. I think that in some suburbs more than others—and Bexley is obviously one of those—the land values are very low even though the overall 2007 capital value may be better than the 2010 market value would have been for the home. I think that is because the land value calculation is not an exact science. It is worked out in the context of the capital value—the capital value of course looking at that general market value—but the land had a property built on it at the time. I think it is very hard to identify it. 
I have had put to me wildly different land values within my electorate. There was a $60000 difference between three properties that front on to the River Avon in the Avondale suburb. They have quite different valuations; $60000 is the difference in the three properties across that range. 
The fourth category are homeowners whose properties have not been so damaged as to warrant a rebuild and whose insurers are willing to fund only the cost of repairs. Those people are left in a situation where they will find themselves out of a home at the end of this arrangement and not in a position to restore anything like the equity that they had in their property before.