South Auckland owners are the latest to join the city's millionaire's club after a humble Māngere weatherboard stunned pundits when it sold for nearly twice its council valuation.
The $1.15 million auction sale set a new suburb record for three bedroom homes, sparking fresh questions about whether Auckland's market is in a boom.
It took just five minutes on Tuesday for bidders to drive the 18 Allen St home's price up to $1m, before a developer with plans to put three houses on the property won out, Barfoot & Thompson selling agent Chintamani Abhynakar said.
The home's owners planned to move to Australia and had set their expectations on an $800,000 sale price - already well above the $660,000 CV. According to figures on OneRoof, the home last sold in 1988 for $94,000.
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"They had told me if they get just $25,000 more than $800,000, they will fly business class to Australia. I said, 'now you can go first class'," Abhynakar said.
Owen Vaughan, editor of property website OneRoof, said recent sales had showed developers were willing in some cases to pay well over CV.
"Lower priced, but still commuter-friendly suburbs such as Māngere and Māngere Bridge are ideal targets as developers can secure a large section for less than premium suburbs and reduce their outlay costs," he said.
Abhynakar said that while the home was not in an area zoned for apartments, it did sit on a 839sq m corner block that made it ideal for subdivision into three separate homes.
In a sign of how lucrative this could be, Abhynakar said a home at 2 Allen St sold two years ago at auction for $850,000, before being developed into three new homes that sold for more than $3m.
The Allen St sale comes as Auckland house prices have been on a run since last spring and were showing few signs of slowing down, despite looming fears from the coronavirus.
New data shows Auckland prices and house sales last month leapt to highs not seen in the month of January since the 2016 boom years.
The city's median sale price hit $875,000, close to record highs and up 8.7 per cent on the median $805,000 price last January.
February sale price figures are expected to show continued jumps.
The home and its 728sq m block is likely to be turned into three separate properties before being onsold. Photo / Supplied
"Housing demand is running hot on the back of the large falls in mortgage rates we've seen over the past year, and the cancellation of the Capital Gains Tax in April," ASB chief economist Nick Tuffley said.
Prices were also being squeezed up due to added competition among buyers after there was a shortage of new homes being listed for sale, he said.
Westpac bank chief economist Dominick Stephens said it was no surprise to hear about record sales like the Māngere home because his team had last year predicted a hot housing market.
But whereas Stephens had forecast price growth to hit 10 per cent this year, the coronavirus loomed as a game changer.
He now tipped the virus to bring house prices grinding to a halt in the second quarter of the year, or even fall, as people feared for their jobs or took a wait-and-see approach on house purchases.
Yet he also tipped the virus' effects to be short-lived and that price growth could climb back up to as high as 8 per cent late in the year, in part as a result of expectations mortgage rates could be lowered further.
Loan Market mortgage adviser Bruce Patten said it was too early to tell what impact the coronavirus would have as the market was still "going nuts".
His team had been through one of their best periods ever after helping customers secure more than $1 billion in home loans in January - a new company record.
Barfoot & Thompson selling agent Chintamani Abhyankar said the new owner might leave the original home but build two more new houses on the site. Photo / Supplied
Showing how hot the market was, he said one of its clients had just been to the auction of a home at 185 Riverside Ave in Point England with a $1.27m CV. It ended up being bought by the neighbour for $1.6m.
Elsewhere, a Takapuna two-bedroom unit recently sold for $1.4 million, or $440,000 above its CV, while a ferocious bidding war for a modest New Lynn home drove its sale price up to $1.8 million, nearly twice its CV.
Both these homes were located in areas where they could be demolished to make way for apartment blocks.
Real Estate Institute chief executive Bindi Norwell said Māngere's popularity had also played a part in the sale.
The suburb's median sale price hit $705,000 in January, up 17 per cent on the same month a year earlier, compared to a 4.8 per cent jump in the wider Manukau Region over the same period.
