Wednesday, 22 January 2014

Welcome to 2014!

We are anticipating big things this year.

As a country we are in good economic shape and there is a general expectation that things are going to remain buoyant throughout 2014.

We have the complication of a national election later this year and it is clear that we are already in election mode. Expect election paralysis to set in to Government from about  April on. History tells us that this should not materially impact on economic activity.

From a regional perspective we are anticipating a ramp up in an already busy local economy driven primarily, and initially, by major housing repairs and rebuilds. We are not out of the woods yet with respect to insurance settlements with just under half of the house insurance policies settled, and about 70% of commercial insurance resolved. The 80,000 homes dealing with out-of-scope insurance matters (pools, driveways etc.) add further complexity, as do significant issues relating to land stability, land levels, land quality and flooding risks. There are still some very complicated and significant issues to be resolved on the housing insurance front. As affected insured, we are all aware of that! Insurance resolution has its own set of cascading constraints!

We are  however, far enough through housing insurance settlements for a big injection into rebuilds and repairs by about the end of the first quarter of this year. This will be driven mainly by owners of homes who have cash settled in late 2013 and will ramp up activity after the time lag caused by planning, contracting  building professionals and the consenting processes. It is generally accepted that that total damage to housing stock in Canterbury is somewhere around, and probably above, $22 billion (out of an estimated total damage cost of $40 billion). That, whichever way you look at it, is a lot of money!

Reflecting over the Christmas break on what lies ahead, I am still of the opinion that we do not understand the scale of what we are going in to and we are not yet thinking strategically enough to be in a position to cope with what lies ahead.

As we engage in a significant increase in housing rebuild and repair, we will also see, more slowly, a ramp up in commercial rebuilds.

Big positive challenges await us and they will certainty test our capabilities.

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