The South Auckland suburb that – briefly – made the millionaire’s club before plunging down may be on its way back to the seven-figure milestone.
Otara, where over 30 years ago brothers Phil and Pauly Fuemana formed the band Otara Millionaires Club when the South Auckland suburb was one of the city’s poorest, cracked its first $1 million house sales at the end of 2020 as Auckland’s property market took off post-Covid.
However, house prices in the suburb plunged more than 13% as the overall market slumped. But the latest figures from the OneRoof-Valocity House Value Index figures show it is now one of the country’s fastest growing suburbs.
The average property value in Otara jumped 7% ($50,000) to $767,000 in the three months to the end of November.
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Ray White Manukau co-owner Tom Rawson is not surprised. “Otara is like the torch bearer, the bellwether. We are first in and first out,” he said.
“When prices fell off a cliff in South Auckland, it was the first to go, and then now prices are coming back. It’s our leading suburb, we know that if Otara is going good, the other suburbs will be coming in the boat.”
Rawson said that the growth this time around in the suburb was not driven by developers snapping up land for subdivision but flippers renovating old stock for families looking for a good home.
“It’s really noticeable that people are moving to Otara from within South Auckland, it’s on the fringe of the eastern suburbs, you’ve got Highbrook and East Tamaki nearby. And it’s not far from Flat Bush which is really expensive real estate, easily going for $1m-plus.”
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Flippers renovating poor quality stock are finding a good market of buyers. “Big families are buying, it’s not investors. They appreciate the work done and are paying $900,000 for a four-bedroom home. If you drive over to Flat Bush, you’re not even going to get a two-bedroom terrace for that,” Rawson said.
“In Otara it’s freehold land, big 600sqm sections. It’s still a community there as well, people have got family and friends and will look just at Otara.”
Rawson said he was certain that Otara prices will bounce back to $1m by early next year.
He said his agents were seeing a similar spill-over effect in Mangere, which attracts people because it is close to the airport, and Wattle Downs and Conifer Grove, which are close to the upscale Karaka lifestyle neighbourhood.
“If we’ve come back now, we’re selling stuff for $900,000-plus then fully we’ll make $1m early next year.”
Rawson said one of his agent had sold the end results of a flipper’s renovation efforts for $940,000 to a family earlier last month.
The flipper had bought the run-down house on Preston Road, in Otara, for $725,000 and completely transformed it, adding a fourth bedroom, new kitchen and bathroom and upgrading the garage to a good rumpus room before putting it back on the market in November.
A three-bedroom property on Parker Crescent, Otara, sold for $720,000 at auction, after investors and flippers competed in 31 bids. Photo / Supplied
“There are a few hurdles to jump through with big families and multiple income earners, where the parents will have the kids on the mortgage as well, which is awesome. It’s really quite rewarding when you see a family combine to buy.
“They transform the garages to have an extra lounge or bedroom or bar or party room or whatever in the garage.”
Rawson said there were some developers who have finished building and on-sold the townhouses on land they bought in 2021 and 2022 who are ready to buy again in the new year – and are likely to pay $1m or more for a good site.
But unlike the frenzy of 2021, where inexperienced mum and dad developers were paying over the odds for a site, this time around people were more cautious.
“In the previous bull market, it felt like every property that had a big backyard was a development property,” he said.
Ray White Manukau co-owner Tom Rawson: “Otara is like the torch bearer, the bellwether. We are first in and first out,” Photo / Supplied
“Now we know there are capacity issues with some stormwater and there’s some big costs for upgrading infrastructure. Not every property is going to be the most desirable development,” Rawson said, citing some buyers who learned they had to pay hundreds of thousands of dollars to upgrade things like Vector transformers or extending water main lines and adding manholes before they could put multiple units on a site.
“We’ve definitely learned,” he said.
This week Ray White agent Pat Lapalapa had 31 bids on a three-bedroom house on 725sqm on Parker Crescent that he was marketing with Debbie Kingi, before it sold for $720,000.
It had a CV of $950,000 but Lapalapa said the price was well up on the $660,000 a similar house in a similar condition over the road got three or four months ago.
“We’re seeing the property flippers are back on the scene, and they base their price on what their return would be after its fully renovated. Those renovated properties have gone up significantly, so that means that a property that needs a considerable amount of work that was going for around $650,000 is probably selling more around the $700,000 to $750,000.”
Lapalapa said that although this week’s Parker Crescent buyer was an investor looking for a long-term holding, property flippers were competing for the property.
“I haven’t seen property developers in Otara yet,” he said, adding that they were stronger in areas like Papatoetoe where they can see more sales of finished terrace houses.
Barfoot & Thompson Papatoetoe branch manager Lance Pemberton confirmed that developers were becoming more active in Papatoetoe after prices got too high in Flat Bush, and added that with a lot more vendors coming to the market now and in the new year, prices would pick up.
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