The housing and mortgage market in Christchurch experienced significant changes since the 2011 earthquake, especially after the reconstruction of the city. The increasing speed of Christchurch average house price exceed the average house price of the whole country, as well as the number of new dwellings. By this regard, this study surveyed the households in Christchurch to analyze the effect of the earthquake on housing and mortgage market. This includes factors such as housing price, interest rate, government policy and socioeconomic factors in terms of age, gender, educational attainment, income, marital status and family life cycle. Logistic regression model is used to analyze the data. The study provides an overview of the housing market and mortgage market in Christchurch. The logistic regression, results show changes on sensitivity between the socio-economic factors and house purchase, as well as mortgage borrowing pre- and post-earthquake. The result indicates that the earthquake in Christchurch has affected households’ decision on house purchase and mortgage borrowing.
‘Housing affordability’ has been a term used to refer to a problem that arises when the costs of housing are seen as being unreasonably high in relation to incomes. In the United Kingdom and Australia the local town planning systems have been used to address housing affordability issues. This response in countries that share New Zealand’s town and country planning history raised the question for this research of the local government response to housing affordability issues in the city of Christchurch, New Zealand. This research was undertaken during the fifth year after the 2010/2011 Canterbury earthquake series. Research conducted by the Centre for Housing Research Aotearoa New Zealand and the New Zealand Productivity Commission present quite different pictures of the housing affordability problem, suggest different solutions and indicate different roles for levels of government, the community housing sector and the housing market. The research undertaken for this dissertation aimed to address the question of the role of the state, through the lense of a local response to housing affordability issues, in the context of a central government response focused on land supply and reforming the Resource Management Act 1991.
"Prior to the devastating 2010-2011 Canterbury earthquakes, the city of Christchurch was already exhibiting signs of a housing affordability crisis. The causes and symptoms were similar to those being experienced in Auckland, but the substantial damage to the housing stock caused by the earthquakes added new dimensions and impetus to the problem. Large swathes of the most affordable housing stock in the east of the city were effectively destroyed by the earthquakes. In itself this would have pushed the mean house price upwards, but compounding problems exacerbated the situation. These include the price effects of reduced supply of both rented and owned housing and increased demand from both displaced residents and an influx of rebuild workers. The need for additional temporary housing while repairs were undertaken and the associated insurance pay-outs bidding up rents with improved rental returns leading to increased interest in property investment. Land supply constraints and consenting issues inhibiting the build of new housing and political infighting and uncertainty regarding the future of parts of the city leading to a flight of development activity to peripheral locations and adjoining local authorities. Concerns that the erosion of the city council rating base combined with inadequacy of insurance cover for infrastructure will lead to large rates increases, increased development costs and reduced amenities and services in future years. These and other issuers will be elaborated on in this paper with a view to exploring the way forward for affordable housing Christchurch City."
New Zealand has a housing crisis. High land prices and high construction costs have all contributed to unaffordable housing. Additionally, the New Zealand dream of the "quarter acre section" lifestyle that has encouraged urban sprawl throughout our major cities with increasingly unsustainable services, transport and road costs. New and exciting housing options need to be explored for urban areas. Christchurch is a city in New Zealand where urban sprawl has always been prevalent. In the wake of the 2010/2011 earthquakes sprawl increased further, relocating large suburban areas yet further away from the city centre. This has caused a greater reliance on cars, and a slower revival to the city. Historically there is an aversion to higher density living. Perceived desirability is a large factor. The medium to high density solutions produced thus far have little regard for the concept of "home", with the use of substandard materials, and monotonous and repetitive design, and essentially falling short of addressing the needs of New Zealand's increasing population. "A Home with a View" looks to address the needs of New Zealanders and Christchurch, through the individual tower-house within an overarching tower-housing neighbourhood development. The design as research thesis develops a medium density tower-housing neighbourhood as a mini city-scape, through the exploration of the tower-house as an intimate space to live and observe from. Tower-housing has the potential to create a delightful, lively neighbourhood environment that contributes to quirky, new, and exciting housing options for New Zealand. The tower-house creates desire through unconventional lifestyle and highlights engaging solutions to an individual vertical housing type.
Organisations locate strategically within Business Districts (CBDs) in order to cultivate their image, increase their profile, and improve access to customers, suppliers, and services. While CBDs offer an economic benefit to organisations, they also present a unique set of hazard vulnerabilities and planning challenges for businesses. As of May 2012, the Christchurch CBD has been partially cordoned off for over 14 months. Economic activity within the cordoned CBD, which previously contained 6,000 businesses and over 51,000 workers, has been significantly diminished and organisations have been forced to find new ways of operating. The vulnerabilities and resilience of CBDs not only influences outcomes for CBD organisations, but also the broader interconnected (urban/regional/national) system. A CBD is a hub of economic, social, and built infrastructure within a network of links and nodes. When the hub is disrupted all of the people, objects, and transactions that usually flow into and out of the hub must be redirected elsewhere. In an urban situation this means traffic jams in peripheries of the city, increased prices of commercial property, and capital flight; all of which are currently being faced in Canterbury. This report presents the lessons learned from organisations in CBDs affected by the Canterbury earthquakes. Here we focus on the Christchurch CBD; however, several urban town centres were extensively disrupted by the earthquakes. The statistics and discussion presented in this report are based on the results of an ongoing study conducted by Resilient Organisations (www.resorgs.org.nz). The data was captured using two questionnaire surveys of Canterbury organisations (issued November 2010 and May 2011), interviews with key informants, and in-depth case studies of organisations. Several industry sectors were sampled, and geographic samples of organisations in the Christchurch CBD, Lyttelton, and the Kaiapoi town centre were also collected. Results in this report describing “non-CBD organisations” refer to all organisations outside of the Christchurch CBD, Lyttelton, and Kaiapoi town centres.
In September 2010 and February 2011, the Canterbury region experienced devastating earthquakes with an estimated economic cost of over NZ$40 billion (Parker and Steenkamp, 2012; Timar et al., 2014; Potter et al., 2015). The insurance market played an important role in rebuilding the Canterbury region after the earthquakes. Homeowners, insurance and reinsurance markets and New Zealand government agencies faced a difficult task to manage the rebuild process. From an empirical and theoretic research viewpoint, the Christchurch disaster calls for an assessment of how the insurance market deals with such disasters in the future. Previous studies have investigated market responses to losses in global catastrophes by focusing on the insurance supply-side. This study investigates both demand-side and supply-side insurance market responses to the Christchurch earthquakes. Despite the fact that New Zealand is prone to seismic activities, there are scant previous studies in the area of earthquake insurance. This study does offer a unique opportunity to examine and document the New Zealand insurance market response to catastrophe risk, providing results critical for understanding market responses after major loss events in general. A review of previous studies shows higher premiums suppress demand, but how higher premiums and a higher probability of risk affect demand is still largely unknown. According to previous studies, the supply of disaster coverage is curtailed unless the market is subsidised, however, there is still unsettled discussion on why demand decreases with time from the previous disaster even when the supply of coverage is subsidised by the government. Natural disaster risks pose a set of challenges for insurance market players because of substantial ambiguity associated with the probability of such events occurring and high spatial correlation of catastrophe losses. Private insurance market inefficiencies due to high premiums and spatially concentrated risks calls for government intervention in the provision of natural disaster insurance to avert situations of noninsurance and underinsurance. Political economy considerations make it more likely for government support to be called for if many people are uninsured than if few people are uninsured. However, emergency assistance for property owners after catastrophe events can encourage most property owners to not buy insurance against natural disaster and develop adverse selection behaviour, generating larger future risks for homeowners and governments. On the demand-side, this study has developed an intertemporal model to examine how demand for insurance changes post-catastrophe, and how to model it theoretically. In this intertemporal model, insurance can be sought in two sequential periods of time, and at the second period, it is known whether or not a loss event happened in period one. The results show that period one demand for insurance increases relative to the standard single period model when the second period is taken into consideration, period two insurance demand is higher post-loss, higher than both the period one demand and the period two demand without a period one loss. To investigate policyholders experience from the demand-side perspective, a total of 1600 survey questionnaires were administered, and responses from 254 participants received representing a 16 percent response rate. Survey data was gathered from four institutions in Canterbury and is probably not representative of the entire population. The results of the survey show that the change from full replacement value policy to nominated replacement value policy is a key determinant of the direction of change in the level of insurance coverage after the earthquakes. The earthquakes also highlighted the plight of those who were underinsured, prompting policyholders to update their insurance coverage to reflect the estimated cost of re-building their property. The survey has added further evidence to the existing literature, such as those who have had a recent experience with disaster loss report increased risk perception if a similar event happens in future with females reporting a higher risk perception than males. Of the demographic variables, only gender has a relationship with changes in household cover. On the supply-side, this study has built a risk-based pricing model suitable to generate a competitive premium rate for natural disaster insurance cover. Using illustrative data from the Christchurch Red-zone suburbs, the model generates competitive premium rates for catastrophe risk. When the proposed model incorporates the new RMS high-definition New Zealand Earthquake Model, for example, insurers can find the model useful to identify losses at a granular level so as to calculate the competitive premium. This study observes that the key to the success of the New Zealand dual insurance system despite the high prevalence of catastrophe losses are; firstly the EQC’s flat-rate pricing structure keeps private insurance premiums affordable and very high nationwide homeowner take-up rates of natural disaster insurance. Secondly, private insurers and the EQC have an elaborate reinsurance arrangement in place. By efficiently transferring risk to the reinsurer, the cost of writing primary insurance is considerably reduced ultimately expanding primary insurance capacity and supply of insurance coverage.
The Canterbury earthquake sequence (2010-2011) was the most devastating catastrophe in New Zealand‘s modern history. Fortunately, in 2011 New Zealand had a high insurance penetration ratio, with more than 95% of residences being insured for these earthquakes. This dissertation sheds light on the functions of disaster insurance schemes and their role in economic recovery post-earthquakes. The first chapter describes the demand and supply for earthquake insurance and provides insights about different public-private partnership earthquake insurance schemes around the world. In the second chapter, we concentrate on three public earthquake insurance schemes in California, Japan, and New Zealand. The chapter examines what would have been the outcome had the system of insurance in Christchurch been different in the aftermath of the Canterbury earthquake sequence (CES). We focus on the California Earthquake Authority insurance program, and the Japanese Earthquake Reinsurance scheme. Overall, the aggregate cost of the earthquake to the New Zealand public insurer (the Earthquake Commission) was USD 6.2 billion. If a similar-sized disaster event had occurred in Japan and California, homeowners would have received only around USD 1.6 billion and USD 0.7 billion from the Japanese and Californian schemes, respectively. We further describe the spatial and distributive aspects of these scenarios and discuss some of the policy questions that emerge from this comparison. The third chapter measures the longer-term effect of the CES on the local economy, using night-time light intensity measured from space, and focus on the role of insurance payments for damaged residential property during the local recovery process. Uniquely for this event, more than 95% of residential housing units were covered by insurance and almost all incurred some damage. However, insurance payments were staggered over 5 years, enabling us to identify their local impact. We find that night-time luminosity can capture the process of recovery; and that insurance payments contributed significantly to the process of local economic recovery after the earthquake. Yet, delayed payments were less affective in assisting recovery and cash settlement of claims were more effective than insurance-managed repairs. After the Christchurch earthquakes, the government declared about 8000 houses as Red Zoned, prohibiting further developments in these properties, and offering the owners to buy them out. The government provided two options for owners: the first was full payment for both land and dwelling at the 2007 property evaluation, the second was payment for land, and the rest to be paid by the owner‘s insurance. Most people chose the second option. Using data from LINZ combined with data from Stats NZ, the fourth chapter empirically investigates what led people to choose this second option, and how peer effect influenced the homeowners‘ choices. Due to climate change, public disclosure of coastal hazard information through maps and property reports have been used more frequently by local government. This is expected to raise awareness about disaster risks in local community and help potential property owners to make informed locational decision. However, media outlets and business sector argue that public hazard disclosure will cause a negative effect on property value. Despite this opposition, some district councils in New Zealand have attempted to implement improved disclosure. Kapiti Coast district in the Wellington region serves as a case study for this research. In the fifth chapter, we utilize the residential property sale data and coastal hazard maps from the local district council. This study employs a difference-in-difference hedonic property price approach to examine the effect of hazard disclosure on coastal property values. We also apply spatial hedonic regression methods, controlling for coastal amenities, as our robustness check. Our findings suggest that hazard designation has a statistically and economically insignificant impact on property values. Overall, the risk perception about coastal hazards should be more emphasized in communities.
In the last century, seismic design has undergone significant advancements. Starting from the initial concept of designing structures to perform elastically during an earthquake, the modern seismic design philosophy allows structures to respond to ground excitations in an inelastic manner, thereby allowing damage in earthquakes that are significantly less intense than the largest possible ground motion at the site of the structure. Current performance-based multi-objective seismic design methods aim to ensure life-safety in large and rare earthquakes, and to limit structural damage in frequent and moderate earthquakes. As a result, not many recently built buildings have collapsed and very few people have been killed in 21st century buildings even in large earthquakes. Nevertheless, the financial losses to the community arising from damage and downtime in these earthquakes have been unacceptably high (for example; reported to be in excess of 40 billion dollars in the recent Canterbury earthquakes). In the aftermath of the huge financial losses incurred in recent earthquakes, public has unabashedly shown their dissatisfaction over the seismic performance of the built infrastructure. As the current capacity design based seismic design approach relies on inelastic response (i.e. ductility) in pre-identified plastic hinges, it encourages structures to damage (and inadvertently to incur loss in the form of repair and downtime). It has now been widely accepted that while designing ductile structural systems according to the modern seismic design concept can largely ensure life-safety during earthquakes, this also causes buildings to undergo substantial damage (and significant financial loss) in moderate earthquakes. In a quest to match the seismic design objectives with public expectations, researchers are exploring how financial loss can be brought into the decision making process of seismic design. This has facilitated conceptual development of loss optimisation seismic design (LOSD), which involves estimating likely financial losses in design level earthquakes and comparing against acceptable levels of loss to make design decisions (Dhakal 2010a). Adoption of loss based approach in seismic design standards will be a big paradigm shift in earthquake engineering, but it is still a long term dream as the quantification of the interrelationships between earthquake intensity, engineering demand parameters, damage measures, and different forms of losses for different types of buildings (and more importantly the simplification of the interrelationship into design friendly forms) will require a long time. Dissecting the cost of modern buildings suggests that the structural components constitute only a minor portion of the total building cost (Taghavi and Miranda 2003). Moreover, recent research on seismic loss assessment has shown that the damage to non-structural elements and building contents contribute dominantly to the total building loss (Bradley et. al. 2009). In an earthquake, buildings can incur losses of three different forms (damage, downtime, and death/injury commonly referred as 3Ds); but all three forms of seismic loss can be expressed in terms of dollars. It is also obvious that the latter two loss forms (i.e. downtime and death/injury) are related to the extent of damage; which, in a building, will not just be constrained to the load bearing (i.e. structural) elements. As observed in recent earthquakes, even the secondary building components (such as ceilings, partitions, facades, windows parapets, chimneys, canopies) and contents can undergo substantial damage, which can lead to all three forms of loss (Dhakal 2010b). Hence, if financial losses are to be minimised during earthquakes, not only the structural systems, but also the non-structural elements (such as partitions, ceilings, glazing, windows etc.) should be designed for earthquake resistance, and valuable contents should be protected against damage during earthquakes. Several innovative building technologies have been (and are being) developed to reduce building damage during earthquakes (Buchanan et. al. 2011). Most of these developments are aimed at reducing damage to the buildings’ structural systems without due attention to their effects on non-structural systems and building contents. For example, the PRESSS system or Damage Avoidance Design concept aims to enable a building’s structural system to meet the required displacement demand by rocking without the structural elements having to deform inelastically; thereby avoiding damage to these elements. However, as this concept does not necessarily reduce the interstory drift or floor acceleration demands, the damage to non-structural elements and contents can still be high. Similarly, the concept of externally bracing/damping building frames reduces the drift demand (and consequently reduces the structural damage and drift sensitive non-structural damage). Nevertheless, the acceleration sensitive non-structural elements and contents will still be very vulnerable to damage as the floor accelerations are not reduced (arguably increased). Therefore, these concepts may not be able to substantially reduce the total financial losses in all types of buildings. Among the emerging building technologies, base isolation looks very promising as it seems to reduce both inter-storey drifts and floor accelerations, thereby reducing the damage to the structural/non-structural components of a building and its contents. Undoubtedly, a base isolated building will incur substantially reduced loss of all three forms (dollars, downtime, death/injury), even during severe earthquakes. However, base isolating a building or applying any other beneficial technology may incur additional initial costs. In order to provide incentives for builders/owners to adopt these loss-minimising technologies, real-estate and insurance industries will have to acknowledge the reduced risk posed by (and enhanced resilience of) such buildings in setting their rental/sale prices and insurance premiums.
