With Auckland’s average property value close to hitting $1.6 million, according to the latest OneRoof house price figures, and big sales dominating the headlines, it pays to keep an eye on what’s happening at the bottom end of the market.
OneRoof analysed 371 auctions that took place in Auckland last week and found that of the 100 sales where the final sale price had been published, just 21 were snapped up for less than $1 million.
Most of those closing sub-$1m deals were first home buyers or investors. The properties they were buying, however, were far from typical, with one located in New Zealand’s most expensive suburb and another selling for $34,000.
Ray White auctioneer and chief operating officer Daniel Coulson singled out 6/27 Wallace Street, in Herne Bay, as a good find for its new owner.
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The property, a one-bedroom, one-bathroom 1960s “pad” with a balcony and a North/West orientation and a peep-view of the sea, sold for $850,000 after passing in at auction.
Coulson, who called the auction, said: “Wallace Street is arguably one of the best streets in Auckland and appeals to downsizers and those looking for a city bolt hole.
The unit, he said, had off-street parking and was close to some of the city’s best-liked cafes and restaurants. “It's also very short walk down to Home Bay beach.”
CBD revival?
Daniel Horrobin, director of City Realty Group, which operates Ray White City Apartments, said his agency had sold 35 sub-$1m apartments in the first half of February.
Of those that sold under the hammer last week, two were snapped up for less than $400,000: a one-bedroom apartment at 607/105 Queen Street, otherwise known as the Guardian apartments, which sold for $350,000; and a two-bedroom corner pad in the Volt Apartments at 1025/430 Queen Street, which sold for $377,000.
Both freehold apartments were marketed as “bank friendly” and were around 40sqm in size.
Horrobin said that investors and first home buyers were returning to the CBD market. “The resurgence is mainly driven by the news of the borders opening. We noticed a significant drop off in the investment sector when the borders closed. Vacancy rates went up following the mass exodus of students in the market,” he said.
Horrobin said that entry level buyers could expect to pay $300 per week on a mortgage. Even with body corporate and rates costs added in it was still cheaper than renting if you could get the deposit together. “That's quite a small apartment but it's very affordable entry level,” he said.
“The sweet spot for first home buyers in the city and city fringes is the two-bedroom apartment with a car park, sitting from around $600,000 to $650,000 max.”
When called by OneRoof, Barfoot & Thompson auctioneer Marian Tolich quipped: “I’m surprised you can get anything under $1m."
Barfoot & Thompson sold quite a few in the week, stretching geographically from Leigh in the north to Waiuku in the south.
Some of the sales include standalone homes within commuting distance of Auckland, such as the “fairytale cottage” that started life in Wenderholm Regional Park but ended up Manly.
At the other end of the city, Barfoot and Thompson agent Antony Greenfield sold a three-bedroom, one bathroom, one garage semi-detached home in 13A Victoria Avenue, Waiuku, for $740,000. The home didn’t really appeal to first home buyers. “It was a mature person’s home and appealed to people looking to retire or downsize.” In the end it was sold to a buyer relocating from Auckland, he said.
Passing in
Looking back over the first two weeks of the month, Tolich said that more than a few $1m homes had passed in at auction – although many sold shortly afterwards.
One home that had passed was 1/39 Kervil Avenue, Te Atatu, a brand-new three-story townhouse awaiting title. The auction stalled at $800,000, and it now has an advertised price of $1,080m.
Asked why some properties were passing in at under $1m, Tolich said: “Finance. The deposit requirements have gone up and up. And there is a perception that the markets are racing away from [first home buyers].”
Many of the sub-$1m properties are one and two-bedroom traditional units that in the past would have been snapped up by investors. Thanks to new tax rules, investors have turned their attention to new builds.
1312/2 Beach Road, in the Scene Apartment buildings, in the CBD, sold for $34,000. Photo / Supplied
This created an opening for first home buyers, Tolich said. “Your first home is never going to be your dream home, and buying is probably cheaper than renting if they can get the deposit.”
Few buyers at any level of the property market get exactly what they want, said Coulson. “It all depends on what boxes you want to tick. Whether you are looking at a property under $1mor over $3m or $4m, there's always going to be things that you compromise on.”
That holds true for the biggest outlier of last week’s auctions: a two-bedroom apartment at 1312/2 Beach Road, which sold for $34,000. The unit, in the Scene Apartment buildings, is leasehold and the block itself has an unusual ownership structure instead of a body corporate, which makes building repairs difficult.
