Like most New Zealanders, I watched in horror as the footage from Cyclone Gabrielle started to come in, feeling a mixture of relief and guilt that my family was home and dry. Two hours east of my Rotorua home, the people of Hawkes Bay weren’t as lucky, and many people from different North Island communities are facing uncertain futures.
It has been hard to put my investor hat on after this event, so when asked to put together a list of things I learned, I felt it might still be too soon.
There are certainly some things I think of, today, following the disaster, and whether those ideas are upgraded to “learned” will depend on time.
1. Climate change response, not just the economy, will be part of the election battle
The stakes are now raised for political parties to have policies leading into the next election. Not just Gabrielle, the sight of Auckland flooding the previous week jolted a lot of kiwis, and they will expect parties to have a well-defined stance on climate change and stormwater infrastructure. Another weather event closer to October would ratchet up the pressure.
2. A lot of money is about to be spent
The coming election policies will impact property owners a lot. More must be spent on infrastructure, and some land use will be curtailed or changed. What can and can’t be developed will be looked at. District plans will certainly be reevaluated.
Costs for infrastructure will be above limits that many local councils are allowed to take on, so the central government will be asked to help. I think there will be battles between local and central governments, with the former wanting funding but resisting what they see as interference.
3. Insurance will cost more, especially in marginal areas (assuming you can get it)
If you cannot get flood insurance, you cannot get a mortgage, and you cannot sell your property to somebody who needs a mortgage. Sadly, I know people are caught in this situation already.
This will be a HUGE issue in New Zealand’s financial system. There is talk of the New Zealand government stepping in as an insurer of last resort; however, that would not be a long-term solution.
4. This has jolted erosion and flooding into the awareness of all New Zealanders and will change how we view waterfront properties.
I don’t think I need to explain this much! Suffice to say presentations such as this will be increasingly sought after by investors.
5. Councils will be more cautious when opening up land for subdivision and will have more requirements for developers
For better or worse, flood plains will probably be reevaluated based on modern-day rainfall levels, which could change how towns and cities evolve.
Nick owns iFindProperty, an investment property agency and iRentProperty, a Rotorua property management business. He now offers coaching services for investors about how to improve the results from their portfolios.