First home buyers packed South Auckland’s auctions this week as the property market came to terms with the Government’s housing shake-up.
With investors in retreat following the Prime Minister’s decision to scrap tax loopholes on investment purchases and extend the bright lines test to 10 years, the field was clearer for those hoping to get their foot on the property ladder.
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Auctioneer Rob Tulp said the auction room at Ray White Manukau on Thursday night was the fullest he had ever seen it.
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“I can’t remember a time with so many first home buyers,” he said. “I’d definitely say the legislation has had an impact. It’s made investors more cautious.”
Tulp, from Apollo Auctions, said there was a lot of energy and emotion in the room. “That’s the first home buyers.”
Nine of the 14 properties on the block sold under the hammer (and another two will likely close deals this week).
Tom Rawson, co-owner of the Ray White Manukau, said the Government’s new rules had had an impact. “We lost bids last night because of the uncertainty [over the tax changes],” he said, adding that the 65% clearance rate was down on previous weeks.
“There were nervous people pulling out because they didn’t know their position now. At one auction, two out of the five registered bidders pulled out. And some sellers have now postponed, they’re in a holding pattern.
“Most will hold their investments, but there’ll be some sort of rethink and a look at cash flow. People will hold and figure out how the equation looks.”
13 Moffitt Street, in Mangere East, South Auckland, sold on Thursday for $1.061 million. Photo / Supplied
Neighbouring 15 Moffitt Street sold last month for $945,000. Photo / Supplied
Rawson added: “There was a lot of interest in the auction results, a lot of social media comments and people watching online from the property investor chat groups. People were saying, ‘Well it hasn’t fallen off a cliff’.”
First home buyers made the most of the reduced competition from investors and bid hard for many of the properties on the block on Thursday night.
Newly married couple Rachel and Patrick Walsh, both 25, snapped up a renovated three-bedroom home at 4 Patricia Place, in Hill Park, for $1.115 million, after 18 months of searching and saving. It was a fitting anniversary.
"This time last year we were supposed to be at an auction, but it was the day we went into lockdown. We missed out on the house, so we kept looking,” Rachel said.
“We really wanted to stay around Hill Park, so we’ve been living with my parents and saving and saving to get more deposit,” Patrick added.
The couple had put in a pre-auction offer of $870,000 but bidding swiftly pushed the price well over $900,000. Tulp had encouraged the couple to put in a bid of $1 million.
Patrick said: “I didn’t want to say it out loud. It was right at our limit.”
Eighteen bidders drove the price of 155 Princes Street, in Otahuhu, to $1.205 million. Photo / Supplied
The bidding kept going but when the hammer came down in the the couple's favour, emotions took over, with the vendors in tears at the back of the room.
First home buyers also snapped up a nine-year old brick four-bedroom house at 13 Moffit Place, in Mangere East, for $1.061 million.
The listing agent, Candace Williams, said she had more than 100 groups express interest in the house and had four bidders – all first home buyers – register for the auction after it was brought forward.
“There were a lot of people who had missed out last month on the house next door at number 15. That went for $945,000 but today's one had more land, a heat pump and been repainted. But the market has also moved on too.”
She said she was looking for more properties at that price point. “It’s crazy to expect that everyone has $1 million for their first home. The competition is cruel, but it’s our duty to get the best price for the vendor.”
$653,000 for a three-bed house at 2/66 Palmers Road, in Clendon Park, was the lowest price of the evening. Photo / Supplied
Investors were still active at the auction, although walked away empty handed.
One 28-year-old buyer who was there with his mum boldly started the bidding for a three-bedroom house at 5 Malmo Place, in Manurewa, at $500,000. Set on a 637sqm site and close to public transport links, the property was billed as an “astute investment”.
Thomas, who was at the auction with his mother Janice (the pair did not wish to give their last names, had only seen the property an hour before the auction but thought he would “step straight in”. He ended up being out-bid by a buyer on the phone who had offered $765,500.
Thomas said he was strict about not going over his limit, and had been encouraged by how much his bank had been prepared to lend on top of his 40% deposit. “The recent changes [to tax regulations] have made it more difficult, but I want to live centrally, buy an investment property and eventually leverage that to buy my own place. There’s no point having money sitting in the bank.”
His mother said she and her husband had each bought their first homes when they were in their 30s, and were keen to see their kids get on the property ladder. “It’s the bank of mum and dad,” she laughed.
The highlight of the auction was a renovated three-bedroom house at 155 Princes Street East, in Otahuhu. It fetched $1.205 million after 18 bidders pushed up the price.
The listing agent, Raksha Lakham, said she had had 100 groups go through the property and another 150 enquiries.
“We thought it might interest developers, but it’s renovated to a high standard, so we had a whole lot more from home buyers. Feedback was $800,000 to $870,000, but then similar properties in other parts of Otahuhu were selling for $1.1 million to $1.4 million.”
The eventual buyer was an investor who plans to hold and later put another house on the back of the 680sqm property.
“He paid extra because he wanted to get in before March 27, when the rules changed. Now there are 17 buyers who missed out. I feel a bit sorry for them, but they have to keep going.”
