July 2021 Real Estate Market
In July the median house price in New Zealand reached a new record and is now $826,000, up 25.2% from July 2020 when it was $659,500.
Clearly prices are continuing to rise but not at such a fast rate as earlier in the year. Whether this is due to what normally happens in winter or the multiple measures imposed by legislation remains to be seen. The number of sales across New Zealand was down 11.7% compared to July last year.
As long as the shortage of houses for sale remains unable to meet demand prices will continue to rise. As a result it will be quicker to sell – which is 3 days less than the same month last year.
Last month more than twice as many properties sold for over $1,000,000 than sold for under $500,000.
Even though the rate of price increases has slowed a little last month alone the average price increase across the country was 1.3% or $11,000 or $355 per day.
National median price $826,000
Auckland median price $1,175,000
National increase since last month 1.3%
Auckland increase since last month 2.2%
National number of sales 7,187 down 11.7% year on year
Auckland number of sales 2,691 down 11.7% year on year
National number of days to sell 31 days – 3 days less than July 2020
Auckland number of days to sell 32 days – 3 days less than July 2020
Lowest regional price increase Southland – up 16.7% in the last 12 months
Highest regional price increase Marlborough – up 41.5% in the last 12 months
James Hardie Leaky Homes – Class Actions
One of the major types of cladding used to construct monolithic homes was the Australian Companies Harditex System. The system comprised of a fibre cement sheet which is fixed to the exterior framing of a building.
The joins between the sheets are sealed using tape and sealant. The finished effect is meant to hide all the joints so that a wall looks “seamless” or monolithic. Because of the many leaky buildings that have occurred in New Zealand monolithic has become something of a dirty word.
Remember not all monolithic homes leak and not all homes that leak are monolithic. That said the monolithic Harditex cladding system has seen many of its users end up with leaky buildings.
So many Harditex clad buildings have ended up as leaky homes that owners sued James Hardie in a class action started in 2015.
The Damages Sort
Damages of $220 million was sought by 376 building owners. Because of the high costs of litigation and the time to prepare such a major case it took until this year (6 years) to get the case to the high court in Auckland. The litigation was funded by Harbour litigation Funding – a London based investor.
The case stated in May 2021 and was scheduled to last 15 weeks. The case ended at the beginning of August (half way through) with an out of court settlement. As part of the settlement James Hardie would RECEIVE a payment of $1.25M from Harbour litigation Funding.
The homeowners get nothing. The funders became more and more unsure of their chances of success as very bad building practices were showing in many of the properties concerned so they pulled the funding. So the poor property owners without money to continue the case got nothing – except ownership of a leaky building.
A Lot Went Wrong
There were many factors that lead to the leaky building epidemic. A lot of this happened at the same time.
Monolithic style become popular
Some deregulation of the building industry
Use of untreated timber
Use of direct fix (ie no cavity)
End of the building apprenticeship scheme
Architectural designs with high weathertightness risks such as no eaves, low pitch roofs, internal gutters, etc
It is easy to see how hard it is to prove that among so many changes it was Harditex to blame. A second class action against James Hardie by nearly 150 home owners has just been dismissed in the Wellington high court. The trial lasted 16 weeks. In this case the home owners funded the action and may have to pay James Hardie’s legal costs as well as their own.
A third class action called the Waitakere litigation is set to be heard in 2023. it is now unlikely to proceed. As a footnote James Hardie discontinued this product the Harditex system this month on the 01.08.2021.