Burnt-out houses and missing walls, sections that can’t be built on and tricky leasehold apartments were among the cheapest properties snapped up by bargain hunters this year.
Some sellers were so desperate to get rid of their properties that they were even prepared to sell them for as low as a dollar.
Others had their hands forced as the number of mortgagee sales rose 54% to 131 in the year ending September 2023 compared to the previous year, according to figures by OneRoof’s data partner Valocity.
Sadder tales also emerged of people who were left with no choice but to sell due to shocking weather events or fires sweeping through and causing significant damage to the properties and rendering them unliveable. An elderly couple’s uninsured home was destroyed in a fire, while a Thames pensioner agreed to sell his house with a $1 reserve at auction after it was destroyed in a large slip.
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But these cheap properties – those under $100,000 – were still few and far between with just 103 residential properties, or 0.2%, selling at bargain-basement prices in the nine months to September 2023, OneRoof analysis of settled sales shows. There was a similar number of cheap sales during the same period last year.
The bargain-basement sales included 62 vacant sites, mostly in low-value suburbs, in Southland and the West Coast, followed by 29 Auckland Central apartments and 12 houses that were mainly in the South Island in very poor condition.
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The analysis found that only 46 of the 103 properties were listed on the open market with the final sale price, on average, 11% higher than the list price.
The cheapest sale this year so far was an abandoned four-bedroom apartment on Carrington Road in Mount Albert that sold for $1 in July.
Despite its low reserve, the problematic property struggled to attract many bidders due to the building having unaudited accounts and no long-term maintenance plan. There were also no details on the weather tightness, earthquake or land defects the plaster property had and the lease for the land was due to be renewed in 2025.
City Sales sales manager Scott Dunn told OneRoof at the time that the vendor was happy to sell it for $1 and then pay the commission on top of that just to be rid of it.
Other apartments advertised as $1 reserve sales have garnered much better results with some vendors leaving the auction room with thousands of dollars more money in their pockets than they had expected.
The lowest sale price in 2023 was $1, for an abandoned unit on Carrington Road, Mt Albert, Auckland. The listing agent was James Mairs, of City Sales. Photo / Supplied
A problem apartment in Auckland's Grand Central station building fetched $17,800 in September. The listing agent was Lucy Piatov, of City Sales. Photo / Supplied
Several leasehold train station apartments in the Grand Central building in Auckland Central were advertised with $1 or low reserves and ended up selling for tens of thousands of dollars more.
In September, a two-bedroom apartment in Grand Central, known for providing budget accommodation, sold for $29,000 and a studio went for $17,800.
The next day, at a different auction room, a tired-looking three-bedroom apartment in the same building sold under the hammer for $40,000.
Dunn said the apartments that sell for $100,000 or less were often leasehold, leaky and under hotel management leases, and attracted cash buyers.
“Nobody cares about what the interest rates are because they just use cash to purchase them.”
A first home buyer scored this Auckland Central apartment for $25,000 in February. Ray White's Dominic Worthington and Ady Huang were the listing agents. Photo / Supplied
He said properties advertised with low declared auction reserves always attracted a lot more people.
“It doesn’t matter how wealthy or how many properties they have, everybody wants to get a bargain. So, if you can legitimately tell someone you could own this for $1, there’s not many people that would say no to that.”
The more expensive freehold apartments were unaffordable for many buyers due to the higher interest rates, he said, and more than half the properties his agency has sold this year have been in the cheaper and more complex category.
The cheapest fire-damaged home to sell this year was a former rental property on Awakino Road, in Te Kuiti, which sold in June for $111,250, which was less than its rateable land value of $155,000. It also had asbestos.
The new owner purchased it solely for the 1022sqm site and cleared the burnt-out house within weeks of taking ownership.
Burnt-out houses in both Auckland and Hamilton have also been snapped up by developers who factor in the cost of clearing the ruins. A house on Roscommon Road, in Clendon Park, with a $1 reserve sold for $661,000 in a hotly-contested auction, while an investor paid $520,000 for a fire-damaged property on Waipapa Crescent, in Otara. A 1920s Hamilton character home on Rifle Range Road, in Dinsdale, which was damaged in two separate fires, sold in a mortgagee auction in February for $411,000 after attracting eight bidders and 52 bids.
Ray White Manukau co-owner Tom Rawson, whose agency sold the two gutted South Auckland homes, said houses that sold for cheap usually had problems and this significantly narrowed down the buyer pool.
A derelict store on Ngarimu Street, in Ohura, resold for $20,000 - $9000 more than what the vendor paid months earlier. Photo / Supplied
“A fire sale attracts a certain type of buyer – you are not going to be competing with investors, you are not going to be competing with home buyers, it’s purely people who have got the means and the ability to work through the challenges of the site, which isn’t everyone.”
Both fire-damaged properties in South Auckland had been bought due to being on large sites that could be developed, he said.
His agency has also sold two properties for under $400,000 this year, which were on half sites and needed significant work.
A three-bedroom, one-bathroom property on Buckland Road, in Mangere, with an advertised reserve of $100,000 sold for $385,500, while a two-bedroom, one-bathroom unit on Hutton Street, in Otahuhu, sold for $396,000.
Rawson said banks would not lend on properties that had problems and this could range from structural to not having a fireplace or deck on the LIM report. These types of houses were instead picked up by property traders with the skill set to address these issues, renovate and resell them.
“There’s people out there that can operate in non-squeaky clean properties and then they spend the time, the expertise and the money to get them squeaky clean.”
Further down the North Island, problematic properties also come up for sale and often with even cheaper price tags.
Land is cheap in Ohura because it is in a flood zone. Ruapehu District Council won’t allow owners to install a septic tank on many of the sections so people can’t build on it. A barely-standing shop in Ohura, a remote town 45 minutes from Taumarunui, sold for $20,000 earlier this year and agents told OneRoof at the time that the sections were usually picked up by people who parked their self-contained campervans or caravans on the sites.
Further south, the West Coast still has some of the country’s cheapest houses.
A fire-damaged home on Awakino Road, in Te Kuiti, sold for $111,250 this year. Photo / Supplied
Property Brokers salesperson Glenys Elley, who has sold several of Buller’s cheaper homes this year including a three-bedroom home on Pakington Street for $180,000, said Buller was still one of the cheapest places to buy a house in New Zealand.
Houses in the area can still be picked up for under $200,000 but often needed some major work such as new wiring, new piles or a new roof, she said. The properties impacted by the floods in July 2021 also sit in the lower price range, but due to the cladding being removed can be less of a surprise for buyers.
Elley said people seem to be looking for the next step up the property ladder and as a result some of their cheaper properties that required cash buyers were taking longer to sell.
“We are not seeing huge amounts of cash buyers like we were. People that are cashed up and looking to buy, we are not seeing them. But most people are borrowing at the moment.”
The lowest sale for the area was an uninhabitable three-bedroom villa on Buller Road, in Reefton, that fetched $77,000 at a mortgagee auction at Ray White Westport’s auction room in May.
The property, which was in such poor condition that the real estate agents hadn’t even been inside, was one of the cheapest properties to sell at auction so far this year and the sale price was well below its RV of $265,000.
People considering a property on Church Street, in Waipawa, in Hawke’s Bay didn’t have much to look at as the house for sale had no windows, walls or doors. The property, which had an RV of $185,000, was marketed at builders wanting to add value to what was effectively a construction site and a forced sale.
A basic bach on Spackman Avenue, in Springston, Canterbury, with a brightly painted interior also needed a specific buyer.
Ray White Rolleston branch manager Dawyne Bloomfield said while the price appealed to first-home buyers, banks wouldn’t lend to them because it was on leasehold land.
At the time of the June sale, there was also uncertainty around the ground lease and dog owners were also ruled out as they were not allowed.
It ended up being bought by an investor, who already owned a property in the area, for $80,000.
Bloomfield said that before Covid people were picking them up for $50,000 or $60,000, and none in the Selwyn Hutts area have sold for more than $150,000, making them significantly cheaper than other entry-level homes.
“You’d struggle out in Selwyn to get anything below $550,000. We’ve just had a house sell in Rolleston for $540,000.”
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