Old memories die hard.
Although changes to the Building Act in 2004 put an end to leaky plaster cladding buildings, memories of the horrors that faced homeowners who’d bought houses built between the mid-1990s through to 2004 linger. Buyers are still scared off - in Auckland to the tune of a 10 percent drop in prices for plaster homes.
Real estate agents and homeowners report buyer reluctance. There are still properties undergoing remediation or being sold at firesale prices by owners who can’t afford to repair or rebuild. OneRoof and data partners Valocity investigated how common this cladding was in New Zealand homes through the decades and the impact it still has on sales prices today.
Sales volume of plaster roughcast homes surged right through 1990-2000, and even beyond 2000 until it dropped post 2010. Nearly one in five builds in Auckland was plaster, as traditional wood cladding declined. Which explains why that 10 percent drop was confined to Auckland: in Wellington, where plaster was less common, prices suffer by only seven percent, while there are only negligible price penalties in other major markets.
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“Significant volumes of housing stock was plaster clad in Auckland and Wellington, so people were the most exposed to the negative impacts of the leaky home era,” says James Wilson, Valocity’s director of valuation and innovation.
Not surprisingly, since 2010, volumes of plaster houses dropped 44 percent, and are now only one percent of Auckland new builds. Instead, mixed material such as a brick base and timber top, or a brick base and a plaster second storey now make 41 percent of builds.
“That reflects the real-world cost to remediate such homes,” Wilson says. "But given the amendments made to the building code and new building techniques, some homeowners today are willing to use plaster cladding in combination with other materials.”
Wilson adds that the increase in homes in Christchurch building in plaster reflects the rapid residential rebuild in the city post-earthquake.
“Plaster cladding surged in popularity because it’s quicker to install and builders can introduce custom designs with relative ease. And the cladding type ’roughcast’ may also include rendered brick, traditional stucco or rendered concrete not just exclusively plaster cladding.”
While median prices surged across the board in the post 2000 decades, plaster houses had the lowest increase at 23 percent, compared to 46 percent for wood, 35 percent for concrete and 30 percent for mixed materials.
The stigma remains even post-remediation. Research about to be published by Dr Michael Rehm, of Auckland University’s department of property, looked at 55,000 housing sales in Auckland between 2011 and 2016 found that un-remediated property prices suffered a 9 percent penalty, whether they were leaky or not.
Dr Rehm, who is frequently an expert witness in leaky homes damages cases, says that not only is there the general market stigma (where people say "I’m not going to touch that") but even post-remediation stigma.
“A minority of people chose to put on brand new monolithic cladding because they liked the way it look. Even with an improved cavity system, they still suffered a six percent discount," he says.
Those who re-clad, mostly in weatherboard, had zero price stigma, Rehm’s study found, but on the other hand, got no premium for the newness value of the re-clad with a brand new code of compliance.
This is particularly hard on older people who rely on realising their house value to fund retirement, Rehm reported in an earlier study with Bev James and Kay Saville-Smith. Older homeowners saddled with a leaky home meant that their home was no longer the nest egg they’d counted on to downsize to free up income for retirement living, leaving them with limited housing choices.
“What is remarkable is that the stigma of monolithically clad homes still persists,” says Shane Martin of Auckland Council’s economics unit, which also found a 9 percent price penalty for plaster-clad homes. “Even though the extent of the leaky homes liability has become increasingly clear, many of these homes have been repaired, and testing is available to determine the water tightness of a home, monolithically clad homes have continued to sell at a discount.
"Again, this does not mean that all these houses were actually leaky, or that they were un-repaired. It only means that monolithically clad houses built during this time period have a stigma about them regardless of the quality of construction,” he says. “This is equivalent to about $140,000 on an average house in Auckland.”
