A first home buyer picked up a dilapidated four-bedroom home on Auckland’s North Shore at a $330,000 “discount”, as a new report showed that seller profits are at a “turning point”.
The rubbish-strewn house on Marlborough Avenue, Glenfield, sold at auction earlier this year for $500,000, with the listing declaring the reserve was significantly below its valuation.
Barfoot & Thompson agent Lynne Lagan told OneRoof the buyer was “a good, keen Kiwi lad”.
”He got a good price and plans to repair the house,” she said. “I popped around the day after it sold and he’d already filled 20 rubbish sacks.”
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Listing photos show the poor state of the plaster house: windows were boarded up, cabinet doors were falling off their hinges and dark black spots could be seen on the floor and walls.
The property, which sits on a half share of a 1490sqm section, had been advertised as having a reserve that was “significantly below the current land [value]”. Its 2021 CV is $830,000, of which $560,000 was for the land.
The sale price is the lowest so far this year for a house on Auckland’s North Shore, and although the vendors got $240,000 more than what they paid for the property in 1998, the sale highlights the recent shift in the housing market.
A new report released today by CoreLogic shows that the number of property making a profit dropped from 99.1% in first three months of the year to 98.1% in the second quarter of the year.
And in Auckland, the number of properties that sold at a loss jumped from 1.8% in the first quarter to 3.6% in the second quarter.
In dollar terms, the nationwide median resale profit dropped from $418,000 to $370,000 and the median loss was $25,000.
CoreLogic NZ Chief Property Economist Kelvin Davidson said the results were not a surprise given the interest rate increases and a surge in new listings shifting the balance of power from sellers to buyers. "These are low figures, but they signal a turning point for previously very strong markets,” he said.
This two-bedroom home on Mayfield Road, in Glenfield, sold close to its asking price of $675,000. Photo / Supplied
"For owner occupiers this isn’t typically a cash windfall unless they’re downsizing or moving into a cheaper location,” he said
Lagan told OneRoof that had she made a couple of other sales in the area for entry-level sums.
A tidy two-bedroom unit on Bentley Avenue, in Glenfield, sold for just over its CV of $720,000, while a three-bedroom brick and tile home on Forrest Hill Road, Forrest Hill, sold for $759,000, well below its CV of $1.025m.
“It had asbestos ceilings and the roof will have to be replaced, but even if you spend $100,000 on repairs it’s good buying,” Lagan said, adding that not many first home buyers were prepared to take on such work.
Harcourts agent Diego Traglia said price drops had put more suburbs within reach of first home buyers with less than $1m to spend, including Glenfield, Birkdale and Beach Haven on Auckland’s North Shore and the whole of West Auckland, including Massey, Henderson and parts of West Harbour.
Traglia noted that some first home buyers could be picky, wanting champagne on a beer budget. “They want the dream - they want the quarter acre with the double garage and the renovated house. There are plenty of options for townhouses but Kiwis don't like that type of property so they still want what they can't afford a lot of the time.”
David Ding, also with Harcourts, told OneRoof that he was relieved the last two weeks had improved - but only below the magic "tipping point” price of $900,000, or, better still, $800,000.
CoreLogic chief economist Kelvin Davidson: "The turning point has arrived.” Photo / Peter Meecham
“You can tell by how many people are coming [to open homes] – you get triple or four times the number [at that price]. It’s a very price-sensitive market, first home buyers driven by banks and affordability.
“Banks are looking at first home buyers’ servicing ratio so it means their borrowing power is 10% less. It was $1m, now it’s $900,000,” Ding said.
He told OneRoof that the last time prices for first home buyers dipped below $900,000 was in mid-2020 – but that would have bought a fully done-up property on a cross-lease site.
“Under $900,000 buyers then would maybe have to compromise on 20% of what they wanted. Now it’s more like 80% compromise – maybe it’s on a main road, or needs work or only two bedrooms.”
One of his listings, a three-bedroom house on Glenfield Road, had attracted a lot interested after it was re-priced from $980,000 to $849,000.
“We had 21 groups through in two days last weekend. When I asked buyers why they’d not come earlier, it was because now the price was below $900,000 and that’s their budget set by the bank.”
Harcourts agent Shaun Block told OneRoof that he had re-sold a two-bedroom unit in Mayfield Road, in Glenfield, that had been bought 15 months ago for $635,000. He had a buyer under contract for “not far off” that price this weekend.
“Things have dropped off, but now we’re seeing pick up. Just this weekend, I signed contracts on three houses, including this one and another one for $1.5m. It’s still early days, but it feels better,” he said.
