A declining interest in South Auckland development property has forced one trader to switch from a quick flick to a full-scale renovation of her property in order to get it sold.
And even then, she may do little better than break even, after the house passed in at auction on Tuesday.
The Ray White agent Rubal Singh, who marketed the renovated house on a 507sqm site on Old Wairoa Road, Papakura with Karlen Athnaeil, said that owner was a seasoned trader who wanted to shift the property so she could continue buying in this market.
She had bought a basic three-bedroom 1950s house in September last year, at the peak of the market, for $757,000, good buying at less than its CV of $780,000.
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In February and March it was listed for $920,000 with two separate real estate agencies as a development project, complete with concept drawings for four terrace houses. If it had sold then, that would have yielded a tidy $163,000 profit in six months.
“This wasn’t an attractive property for developers, it was just for traders. All those developers and speculators had disappeared,” said Singh.
Earlier in the year the property at Old Wairoa Road, Papakura, had failed to attract developers with concept plans for four terrace houses. Photo / Supplied
Instead, the vendor changed her strategy and completely renovated the house, putting on a new roof, adding a fourth bedroom and deck, redecorating and updating the kitchen and bathroom at an estimated cost of $100,000.
Despite over 30 bids, the now smartly renovated four-bedroom house passed in at auction on Tuesday at $800,000. But by the next day, Singh had multiple offers on the house and expected it to sell for high-$800,000s – a good price, but nowhere near the same margin for the flipper.
“She saw that home buyers were the target, after all that speculator money went away, so a renovated house works for them,” Singh said.
The extensive renovations on the house on Old Wairoa Road, Papatoetoe, included new roof, decking, kitchen and bathroom. Photo / Supplied
“At least she recovered her money – there are people losing $500,000, $600,000, even $1m. There are quite a few of those stories in Papatoetoe and Otara.
“It was crazy last year, that interest rate was so attractive, it was a once in a lifetime opportunity. Some people took off and made a fortune.
“Now there are a lot of people still backing out [of deals], people who bought between September and the end of November last year on 12-month settlements that we’re selling before they settle,” he said.
Ray White Manukau co-owner Tom Rawson said that first-home buyers are benefitting from investors and developers pulling back in South Auckland.
In this week’s auctions, a classic four-bedroom 1950s house on a 1060sqm section on Kimpton Road, Papatoetoe, sold to an extended family for $1m, just $75,000 less than CV. OneRoof records show the property last sold 25 years ago for $180,000.
Family buyers secured a four bedroom home in Kimpton Road, Papatoetoe for $1m. Photo / Supplied
“This property had sat on the market since November, with price by negotiation. We took it to auction to see what cash buyers there were, and after 77 bids it sold to a family.
“It was an investor selling, but this is a great first buy as it’s a large, good site, a good home,” Rawson said, adding that the suburban zoning meant that in the future the family could add more buildings for extended family.
“They were in tears; the vendor and the buyers were hugging each other. We’ve got good emotion now in a busy auction room.
“Three weeks ago, you wouldn’t have seen people hugging, it’s cool to see that again.”
Ten bidders registered for the auction of a four-bedroom home on Carlie Street, Papatoetoe, that sold for $1.28m. Photo / Supplied
A mix of developers, investors and home buyers were also competing for another Papatoetoe four-bedroom brick and tile on Carlie Street. The house on 822sqm of land zoned for suburban development sold for $1.28m, $55,000 over CV.
“We had 10 bidders registered for the auction, we haven’t seen that for a while,” said Rawson.
"And you don’t see houses going above CV in South Auckland at the moment.”
He said that a realistic vendor put the auction reserve below CV, but bidding pushed it well above.
“It seems like there’s a buzz at the moment. Not a floodgates, but people have been sitting on their hands for a while and buyers and sellers are realistic,” he said.
