At Barfoot & Thompson’s Auckland auctions this week a large, seven-bedroom new-build home in Papatoetoe sold for $1.604 million. Fifteen minutes later a modest two-bedroom home in the same suburb sold for $1.71m. Both sales were proof of rising confidence in the city’s housing market, and a sign that buyers could soon be jostling for space in auction rooms.
What’s more, the two-bedroom sale on Station Road is a sign that developers are back shopping for land.
The Station Road house, which sits on a 1017sqm section zoned for urban density and marketed by Donald Gupta and Anuj Bisht, pulled in six registered bidders – all developers on the hunt for sites for their new projects.
Gupta told OneRoof that his vendor accepted a pre-auction offer of $1.4m within two days of the property hitting the market. But the agent knew there was a lot more interest in the land, which was well served by public transport and close to schools and Middlemore Hospital.
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The strategy paid off: after 10 minutes of fierce bidding, some in lots of $1000 or less, the property fetched another $310,000.
The owner, who with her late husband had paid $50,000 in 1981 for the tidy 1930s house, was in tears, hugging the agent.
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Gupta said he sensed the market shifting in April and decided to sell all his new listings by auction. In July, he said, seven out of seven properties sold under the hammer, mostly to developers.
Earlier in the month a developer client paid $1.495m for another 1950s house on 868sqm of land on Great South Road, Papatoetoe. It was zoned for apartments, and had a CV of $1.6m, records show.
A couple of other places Gupta was selling in June, 804sqm on Sunnyside Road and 809sqm on Motatau Road, both zoned for suburban density, went for $1.35m and $1.365m respectively. And this week Gupta expects big interest from developers for a 837sqm site with a three-bedroom 1950s house at 6 Hamilton Road, Papatoetoe. It too is zoned for suburban density and has a CV of $1.35m.
The Station Road, Papatoetoe, house had an offer from a developer within two days of listing. Photo / Supplied
Developers paid $1.495m for a 868sqm site on Great South Road, Papatoetoe. Photo / Supplied
Unlike in the frenzy of 2021, Gupta said these developers are experts who sat out the craziest prices and concentrated on finishing the buildings on their existing plots.
“Now they’re selling up their finished townhouses, they’re all cashed up and buying again. Even if they pay a bit more for a piece of land, when they fit five or six units on a property, that’s maybe an extra $30,000 added to the costs for each unit.
“By the time they come to sell, they’ll get that on the house price,” he said, adding that his clients like to have two to five projects on the go at one time, each at various stages from consenting to completed and sold.
“I have seven to 10 developers actively looking for land, they’ve already bought some sections but want more.”
A 804sqm site on Sunnyside Crescent, Papatoetoe, sold to developers for $1.35m. Photo / Supplied
Developers are chasing an 835 sqm site at 6 Hamilton Road, Papatoetoe, which goes to auction this week. Photo / Supplied
Barfoot & Thompson Otahuhu branch manager Gurjeet Sekhon said the return of first-home buyers to the market means finished terrace homes are selling fast, so developers are back to finding new land to fill the pipeline – which can take 12 months from purchase to council signed-off houses ready to sell.
“Last year with the market uncertainty, professional developers were holding back and didn’t want to take the risk.
“This is the time to start planning because there’ll be the demand, but nothing finished. One developer we’re working with has bought six properties in the last two months, from 800sqm to 1200 sqm – that’s maybe 50 housing units, but they’ll be 12 months away from finishing,” he said.
A seven-bedroom house on Rose Road, Papatoetoe sold for $1.604m under the hammer. Photo / Supplied
He added that the frenzy for developable sites in the 2021 peak was driven by speculators hoping to make a quick flick profit. This time around buyers are seasoned builders who know what will sell and have the cash to complete a project without needing pre-sales to get banking finance to complete the build. The sweet spot, he said, are the three-bedroom townhouses with one garage which currently go for $850,000 to $900,000.
Sekhon added that his branch had 80% clearance for auctions in March, April and May, and that success rate had gone up for June and July.
A tinier niche, large family homes for multiple generations, has also done well in Papatoetoe.
The seven-bedroom 365sqm house on Rose Road, Papatoetoe, marketed by Barfoot & Thompson agent Ailsa Zou, found good demand at auction last week.
“It was the biggest house in Papatoetoe. Otherwise you’d be looking at Flat Bush for these multi-generation homes,” she said.
“We had three bidders competing, two families really fell in love with it,” Zou said. Fast bidding drove the price to $1.604m, $79,000 above CV.
She said buyers figured that today 582sqm of land would cost $800,000, and at today’s building costs the house would cost over $1m to build.
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