Auckland first-home buyer scores apartment for $25,000

A two-bedroom apartment in downtown Auckland sold under the hammer last week for $25,000 – one of the best buys of the year.

The 75sqm leasehold property on Beach Road sold to a young first-home buyer bidding over the phone.

Ray White agent Dominic Worthington, who marketed the apartment with Ady Huang, said it was a “laborious” auction, but “we got over the reserve”.

“We set it something like three days beforehand, that’s when you have the meaningful conversations with the vendor – with some gnashing of teeth and hand-wringing,” he said.

“In the auction, we always go back and check with the vendor ‘you comfortable’? We got a few thousand over the reserve.”

The property had a 2021 CV of $350,000.

Worthington told OneRoof that the vendor had owned the sixth-floor apartment in the Scene One block for 15 years.

He said the property had attracted multiple calls from interested buyers and there were six registered bidders after a solid three-week marketing campaign.

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“That’s a good market, it wasn’t a half-hearted attempt, it got out to the widest market.”

The north-facing apartment is in a block which Worthington described as having “a unique risk profile”, meaning it needed remediation.

He said last year, before a remediation plan was in place, sellers had got as little as $5000, but now that the body corporate has a design and plan underway buyers knew what they were up for. A confidentiality agreement with the body corporate forbids him from mentioning what that cost might be to an owner.

Worthington said the apartment’s annual outgoings for leasehold, body corporate fees and rates was around $28,000, or just under $540 a week.

“That’s cheaper than the rental on a two-bed, two-bath apartment. People see ‘I can buy this, I’m not encumbered by a massive mortgage’.”

The two-bedroom, two-bathroom apartment in Scene One, Beach Road, sold for several thousand dollars over reserve. Photo / Supplied

For sale: A three-bedroom terrace house at 7 Dovedale Place, in Parnell, Auckland, goes to auction on February 23. Photo / Supplied

He noted a flow into the city by first-home buyers frustrated by suburban residential prices where vendors are still stuck expecting “yesterday’s prices”.

“It’s not the luxury end, but buyers can spend anywhere between $25,000 and $625,000, that’s the sweet spot. It’s better than a year ago,” he said.

Worthington and Huang are bringing another leasehold property to auction next week - a three-bedroom terrace house at 7 Dovedale Place, in Parnell. The property, which has ground rent, rates and body corporate fees of $30,000 a year, is expected to sell below CV.

Daniel Horrobin, director of Ray White City Group, said that his agents were definitely seeing a return of investors to the inner-city apartment market this year.

“One of the trends is that the capital growth is not there, so investors are looking for yields,” he said, adding it has been a while since yields have reached 7% to 7.5%. Those numbers have been encouraging savvy investors back to buying, some not put off by the need for remedial work on some apartment blocks, and encouraged by high demand from renters.

“We’ve run out of properties to let – it’s been a while. The city is coming back to life and people want to live back in the city for the lifestyle,” he said. Recent viewings for apartments on Queen Street and Nelson Street had between 20 and 50 groups through. This summer tenants were a mix of young professionals, and both local and international students.

Horrobin said savvy buyers are shopping in the $250,000 to $450,000 “sweet spot” price range, helped by vendors who are prepared to meet the market with their price.

He said first-home buyers are doing the math, too, buying apartments for as little as $350,000 to get a foothold in the city lifestyle.

The sales environment in Auckland has altered substantially in the last 12 months. REINZ figures for January show that residential sales in Auckland in January dropped 29% year on year to 943 - the lowest number of monthly sales in the city since records began. Days to sell for Auckland in January rose to 51 last month while the city's median sale price was down 21.&% year on year to $940,000.

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