Cashed-up investors are turning up at Auckland city auctions ready to pounce on bargains around the city.
At Ray White Auckland Central auctions last week, buyers snapped up two apartments for less than $200,000 a piece.
The first, a two-bedroom, two-bathroom apartment on Dockside Lane had passed in at auction for $140,000 before selling two hours later for $142,250, Ray White agent Dominic Worthington told OneRoof. A second two-bedroom apartment in the same downtown neighbourhood, on Mahuhu Crescent, between Quay Street and Beach Road, fetched $180,000.
Both had advertised declared reserves of more than their eventual sale price but the bargain hunters prevailed.
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Worthington said the apartments were leasehold so only cash buyers were likely to be in a position to purchase.
“But investors have done their numbers,” Worthington said, adding that the one of the vendors had been getting $600 per week rent.
“With $18,000 annual leasehold, that’s just under 10% yield. Even if the ground rent goes up, that might drop off to 7%, but they [investors] see the commercial reality.”
Worthington said buyers were looking at everything, and are extremely well educated about prices, comparing properties meticulously.
“They are more educated than the sellers. What sellers who let their properties pass in at auction don’t realise is that the attrition rate of buyers [between looking at a property and getting to auction] is massive," he said.
A 93sqm two-bedroom apartment on Mahuhu Crescent, in Auckland CBD, sold for $180,000. Photo / Supplied
“Investors typically do a mountain of research before they turn up on the day,” he said, adding that sellers who think there’s another $10,000 or more they could extract for their property were missing out on the sale.
“We still need to educate the sellers to recognise the right market,” Worthington said.
Daniel Horrobin, director of City Realty Group, which operates Ray White Auckland Central, director, Daniel Horrobin, said Auckland’s city apartments were bucking the trend seen in other markets.
He attributed the packed auction rooms and competitive buyers for these lower-priced apartments to confidence that July 31’s reopening of New Zealand’s borders to international students and migrants will restore demand for city rentals that all but disappeared in March 2020.
Apartment investors are anticipating a return of overseas students, so are carefully picking up apartments with good rental yields. Photo / Ted Baghurst
His city office reported 80% auction clearance rate over three months to July, up on the 75% clearance average in first seven months of this year.
While the latest OneRoof house price figures show the average property value in Auckland Central has dropped 4.5% in the last 12 months, the key metric for investors is rental of income in the city, and recent figures suggest rental income is improving.
Barfoot & Thompson reported that Auckland’s average weekly rent rose by 1% during the second quarter of the year, and is up 3.27 % on the same quarter last year.
Director Kiri Barfoot said the market was catching-up off the back of frozen and slower-moving rents in 2020 and early 2021, but she expected these increases to ease in the months to come as tenants grappled with increasing costs of living.
