Buyer’s $1.25m gamble on South Auckland dump ends year later in $375K loss

A South Auckland developer this week off-loaded a piece of land in Papatoetoe for $875,000 – $375,000 less than what he’d paid for just over a year ago.

The vendor had paid $1.25 million in July for the 969sqm property on Cambridge Terrace, Papatoetoe, a flat site zoned for urban density close to the town centre. Only the framing of the original house was still standing, but, unlike many recent development site sales, this one did not come with resource consents or concepts for development.

Bayleys agent Tony Chaudhary, who marketed the property with Gaurav Minhas, said that after an earlier deal failed to settle, the vendor had been trying to sell the property for nearly six months, inviting offers above $900,000.

“When that didn’t happen, about a month ago we said ‘let’s see the best we can do and just cut it loose’,” Chaudhary said.

That plan pulled in four bidders on Monday – three by phone and one in the room – with two actively bidding, he said. Bidding paused for negotiation at $820,000 and then $840,000, before the hammer came down at $875,000. “This is close to $900,000,” he said.

Four bidders competed for the Papatoetoe development property, which had earlier invited offers of $900,000 and above. Photo / Supplied

“People who bought land in the last 12 to 24 months of madness in the south and west, most of them would sell with resource consents.

“I've been working in this development market for 17 years. We see land sales come in waves – in a high market, and then when it’s going down, like now. There’s lots on the market now from developers, flippers and speculators, not so much the mums and dads.”

Chaudhary said that smart buyers are looking for bargains, knowing other developers are hit by dropping prices for their finished homes, rising interest rates and unpredictable construction costs.

However, he said, some vendors have not realised how much the market has shifted.

A stylish bungalow on Heretaunga Street, Onehunga, sold for $1,400,500 – $100,000 more than what it got in October 2020. Photo / Supplied

In other auctions this week, sellers who had bought two years ago as the market was heating up fared better on their resale.

A smartly updated three-bedroom bungalow on a cross lease section on Heretaunga Street, Onehunga, sold for $1,400,500 – reaping the vendors just over $100,000 gain on their purchase price of $1.3m in October 2020.

Ray White agent Jared Hards, who marketed the property with Mia Kranenburg, said that the sellers were realistic about today’s market, and the property had not been altered in the intervening time.

Agents say the realistic vendors knew they would be buying in a market with similar price drops from the peak. Photo / Supplied

“They knew that in the market last year, this would have gone for up to $1.6m or $1.7m. They’d hoped to get their money back, so were pretty pleased with the result. They’re buying in the same market, so if they pay $300,000 less for their next house they’re good,” he said.

“There were four bidders, with two of them fighting it out. The buyer is an expat Kiwi sportsman returning home to play in New Zealand.”

Hards added that there is definitely a pick-up in the spring market, with attendance at open homes back up to 20 compared to only five or six in the winter with a noticeable return of first-home buyers looking at properties around $1m.