Lucky first home buyers who won the first KiwiBuild ballots are pocketing lotto-style gains, new research suggests.
Four years after the Government unveiled its first set of discounted homes on Liberation Road, in South Auckland, homeowners are putting the properties on the market for resale.
OneRoof and its data partner Valocity identified three homes that were first bought at KiwiBuild prices as having resold this year for $900,000 and above.
The gains for sellers were between $235,000 and $276,000.
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The ballots for the Liberation Road homes were held in 2016, with buyers signing up to unconditional contracts in 2018.
Of the first homes to be completed, 12 were three-bedroom houses priced at $579,000 and six were four-bedroom homes priced at $649,000 – about $50,000 cheaper than what similar non-KiwiBuild homes in the suburb were selling at the time, says Ray White Manukau director Tom Rawson.
Rawson said that demand for the KiwiBuild homes on Liberation Road was high at the time. "The ballots were oversubscribed. Some of the buyers who missed out on KiwiBuild then negotiated with developers to bring prices down of non-KiwiBuild homes to the KiwiBuild price. We had heaps who would say, 'I need to pay $649,000 for this house, otherwise I'll lose my KiwiSaver grant. The cost of building the KiwiBuild was the same as the cost of the other ones, but [the developers] were getting a bit of a premium on the other ones."
According to the Ministry of Housing and Development, 1386 KiwiBuild homes have been built and sold. Another 1349 are currently under construction. The majority of homes under construction, are in Auckland (1140), followed by Queenstown (105), Wellington (77), and Rotorua (27).
A Christchurch home bought at KiwiBuild prices sold this year for $705,000. Photo / Supplied
Most KiwiBuild are built by private developers, but underwritten by Kāinga Ora, which will buy them if they can’t be sold.
Under the KiwiBuild dead of covenant, owners of one-bedroom or studio homes bought at KiwiBuild prices had to live in the property for at least one year, while owners of two-bedroom-plus homes bought at KiwiBuild prices were locked in for at least three years.
OneRoof also identified resales of properties bought at KiwiBuild prices in other parts of the country. In Christchurch, a two-bedroom KiwiBuild home bought in 2018 for $495,000 resold in March this year for $705,000 - a gain of $210,000.
EasyStreet mortgage adviser Gareth Veale said the house was one of three KiwiBuild homes earmarked for Studholme Street, in Somerfield, and all three made the national headlines in 2018 because no one had wanted to buy them.
Veale described the gain on the two-bedroom home as "incredible". “That’s your lotto win," he said.
OneRoof also identified several listings of original KiwiBuild properties, including a one-bedroom apartment in Ockham Residential's Bernoulli Gardens, in Hobsonville, Auckland, which was bought in 2017 at the KiwiBuild price of $450,000 and is now on the market with an asking price of $559,000.
A one-bedroom apartment bought in 2017 for $450,000 is back on the market for $559,000. Photo / Supplied
As well as the capital gain, KiwiBuild buyers save money on mortgage payments, which adds up to tens of thousands of dollars over the life of their mortgage. Buyers of the Ockham apartments each saved $65,000-plus on their purchase, compared to equivalent apartments in the development.
Veale said at current mortgage rates that $65,000 instant equity would add $57,746 in savings over the life of the mortgage. “At any point [on the property ladder] they will have more equity because of that. The other way to look at it is if you made the same mortgage payments, you would knock 8 years off the mortgage.”
KiwiBuild homes can be available direct if the demand is low or ballot draw, where demand is higher. The ballot ensures the process is fair and provides an equal opportunity for all interested buyers. It’s not unusual to have hundreds of applications for each KiwiBuild home.
A recent ballot for KiwiBuild homes at Freeland Avenue, in Mount Roskill, Auckland, shows current buyers are still getting a discount. The 16 homes were priced at $860,000 - almost $100,000 less than two homes in the development that were put on the open market for sale.
