The luxury apartment market is being hampered because downsizers can’t sell their houses for the price they want, said Ray White agent Ross Tierney, adding that another issue was older people even with substantial assets could not meet the strict lending criteria of banks.
A case in point was the pulling from auction on Wednesday of a luxury apartment at 65 St Heliers Bay Road, but not because people did not want to buy it.
Tierney said he had sold the three-bedroom, three-bathroom boutique apartment twice already through strong conditional offers but they had fallen through because the would-be buyers had been unable to sell their homes.
OneRoof reported earlier this month the apartment was in a block redesigned by a couple who had bought a failed development, and where the penthouse suite sold last month for $8.63 million, leaving the developers, Peter and Judy Jones, with just the one apartment still to sell.
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Tierney has the listing and said the apartment was beautiful but needed a cash buyer “who’s ready to move into arguably the best apartment left on the market in Auckland”.
“It’s the last one in the building. It’s a very, very nice apartment and it’s very large and well appointed. It’s like a house, really good storage, all that stuff.
“We’ve had a number of contracts that were conditional that have come unstuck because buyers don’t get what they want for their place.”
The conditional offers in this case were dependent on houses worth $6m or $7m selling, and those people had beach houses as well.
The Bay complex on St Heliers Bay Road in St Heliers, Auckland, has sold five of the six apartments for $34.73m after the developer turned the failing project into a success. Photo / Supplied
Sometimes owners who needed to sell their house before they could buy felt they were losing money if they could not achieve the prices that were being gained back in 2021, he said.
That might be the difference of getting $10m in 2021 and only $6.5m in today’s market.
“So you get this log jam where they want to buy in today’s value but they don’t want to sell because it’s like their nest eggs and they can’t get income.
Bank lending, or lack of, is another problem even at the high end of the market.
Tierney talked of clients in their late 60s with $20m-plus worth of property portfolio with no debt and with beach houses who had gone to banks wanting top-up loans and the banks had said no.
They did not meet the servicing risk criteria so even clients who drove porsches and who most people would consider wealthy were being restricted in their next move.
A three-bedroom apartment at 2/27A Paritai Drive, in Orakei, Auckland, has a $6.695m price tag. Photo / Supplied
Tierney said one had almost completed a multi-million-dollar project and only needed a few $100,000 to finish but was refused the loan by the bank.
“It’s interesting to hear these stories from guys 30 years my senior who have been around the block and made a lot of money and they are in the position the 25-year-old trying to buy their first home is in.”
He said banks used to lend on equity but that had changed, and neither did it matter if people had $1m in the bank.
Another apartment in sought-after Paritai Drive in Orakei, on for $6.695m, was facing the same issue with three people wanting the apartment if they could only sell one or more of their assets.
The apartment had “knockout” views with a wide 25m frontage and would have sold in any other market, Tierney said.
“We’re seeing it across the board. Paritai has been really, really popular but no one can actually do the deal.”
- 3/65 St Heliers Bay Road, St Heliers, Auckland, is for sale by way of price by negotiation
