A “change in circumstances” forced the owners of a 1940s bungalow in South Auckland to sell at auction for $1.465 million this week - almost $1m less than the windfall they had been expecting.
Records show the owner of the three-bedroom home on King Street, in Papatoetoe, had sold the property at auction in November 2021 for $2.404m - after less than two weeks on the market.
But the deal appears to have collapsed, with the property going back on the market in February this year, with the same agents and virtually the same advertising.
Both listings highlighted that the bungalow was "built by our wonderful vendor's own father from the ground up" and had been in the same family for 80 years. They also highlighted the potential to develop the property, which sits on 1012sqm of land zoned mixed housing suburban.
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However, the listing from November 2021 said the property had received a pre-auction offer while the listing for this week's auction declared: "A change in circumstances for our owners sees this property in a must-sell situation!"
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Property records suggest the November 2021 sale was never completed as there was no transfer of ownership between November 2021, after the $2.4m sale, and February this year. The property is still in the original owner's name.
At yesterday’s auction, bidding on the bungalow started at $1m, and the property was announced as on the market at $1.4m before selling for $1.465m, which was still below its 2021 CV of $1.775m.
OneRoof reached out to the agent for comment but has not heard back.
The King Street home is the second property in Papatoetoe to suffer a major loss in the last two weeks.
A property on Saint George Street sold for a $995,000 loss. Photo / Supplied
OneRoof reported last month that a four-bedroom home on Saint George Street in Papatoetoe sold at the end of February for $1.305m - almost $1m less than what the vendor paid for it a year ago.
Ray White South Auckland owner Tom Rawson, who was not involved in either the King Street or Saint George Street sale, said that less than 1% of sales made during the market frenzy in 2021 had failed to settle. However, he noted that broken deals often left the original owners in a desperate situation, especially if they had already purchased again.
“When anyone loses that kind of money, it’s sad, regardless of whether it is happening 100 times or just the one time. It’s what they should have got because that’s what they agreed to,” he said.
In some of these cases, developers would have made a commercial decision not to settle and lose the 5% or 10% deposit because it was cheaper than paying full for properties that will have dropped in value since the market peak, he said.
“It was quite rife for a period of time there where people who had never completed a development before were paying moonbeams for properties, which might have sounded like a good idea at the time but come settlement doesn’t sound like great ideas anymore.”
Longer settlements, of between six and 12 months, were quite common as it gave developers time to get the consents and be shovel-ready by settlement, he said.
“Everyone was eyes wide open and hoping the market was where it was at or even higher and that person was shovel ready and into it, but obviously people are making decisions to not proceed because it’s not viable economically.”
CoreLogic head of research Nick Goodall said sales that occurred during the end of 2021 when the market peaked and had long settlements may have fallen over due to a change in circumstances or financing conditions.
Some deals may have also gone bust if they were conditional sales reliant on another property selling first.
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