Investors and developers have been snapping up properties at auctions and making speedy offers on houses new to the market in the last few weeks – an early sign, agents say, that the market could have hit its bottom.
Cheap new-builds around the $700,000 mark in Hamilton are hot with investors wanting to take advantage of the more favourable lending for them, while developers and flippers are going for cheap renovation projects often with development potential.
At Ray White Manukau’s auction rooms this week, seven of the 11 houses were sold to investors and developers and just four went to home owners.
Ray White Manukau sales manager Richie Lewis said if Tuesday’s auction was anything to go by then investors have returned to the market. The most noticeable change this week was seeing developers back in the room bidding on older homes with do-up potential on larger sections.
Start your property search
“We haven’t seen too much developer engagement so this one is a fairly fresh development with these guys looking at these properties.”
While they had been bought as rental properties in the short-term, Lewis said four of the houses had been purchased with future development potential in mind.
“These are freehold properties with do-up potential on them. So these are the kind of properties that an investor might move straight into a renovation to resell or they will sit on it for a while.”
This well-kept Bankwood Road home in Chartwell, Hamilton, was snapped up for $834,500 in just three days. Photo / Supplied
An investor/developer paid $812,000 for a four-bedroom home on a 690sqm section at McAnnalley Street, Manurewa, after a two-way bidding war. All 14 properties that went up for auction received bids and there was an average of four people bidding on each property, which Lewis took as a “really good sign”.
“We’ve seen some pretty good activity in the last month, but we are now starting to see some investors coming back into the frame and of course we are now seeing some of these developers re-eyeing the potential there. If there’s a property that has that potential, they appear to be putting their hand up for it which is good to see.”
Their return had possibly been spurred by the market settling down a bit and investors/ developers realising that there are motivated vendors who are not just testing the market in terms of value, but actually wanting to make a legitimate move, he said.
6 and 6a Morrow Ave in St Andrews, Hamilton, are two-bedroom, one-bathroom units with an asking price of $625,000 per unit. Photo / Supplied
Lodge Hamilton salesperson Chase Gray has seen investors shopping around in the past three weeks and a three-bedroom property on Bankwood Road, Chartwell, was snapped up in just three days for $834,500.
“A father investor bought it to future-proof for his children for them to move into one day, but he will rent it out for the next five years.”
The Bankwood Road property is on the higher price range for those investors looking at the moment with houses around the $600,000 to $700,000 mark appearing to be more attractive to them.
A unique two-bedroom 1970s property at 2 Marnane Terrace in St Andrews, Hamilton, with an asking price of $699,000 has attracted a lot of investors. Investors have also being eyeing two units at 6 Morrow Ave and 6A Morrow Ave, also in St Andrews, for sale for $625,000 as they see potential in earning double rent while also securing 700sqm to land-bank.
Gray thinks investors are biting now while interest rates are still affordable and they feel like they are getting a really good price for the house.
An investor/developer paid $812,000 for this four-bedroom home on a 690sqm section at McAnnalley Street, Manurewa, after a two-way bidding war. Photo / Supplied
Harcourts Hamilton salesperson Yvenna Yue said there are investors buying cheap houses to do up and flip as well as buying new homes priced at around $700,000 to take advantage of the more favourable new-build loan terms.
While Yue hasn’t seen a big increase in investors yet, a lot of the ones who are buying want new-builds.
“Normally we see a lot of homeowners buying them, but now investors are coming back to buying them because they get a special discount on the loans if you buy new-builds.”
Some banks such as ANZ are offering discounted floating rates for new-builds and usually only require a deposit of 10% rather than the usual 20% deposit.
Just last week, Yue’s team sold three new-builds priced in the lower range to Auckland investors including a two-bedroom townhouse on Insoll Avenue, Enderley for $675,000. A two-bedroom, two-bathroom townhouse on Glenview Terrace, Glenview, also sold for $750,000.
There is now just a three-bedroom townhouse left in the Insoll Avenue development which is now priced at $839,000, after dropping in price by $20,000.
5/85 Insoll Avenue in Enderley, Hamilton, is a brand-new three-bedroom townhouse now priced at $839,000 after $20,000 was taken off the original price. Photo / Supplied
“From the house we sold, identical ones, we can tell the price is going down. So now we are talking about more people coming back to buy because they are thinking it’s probably hitting the bottom now.”
Yue said there is a difference between investors who are buying them solely to rent based on the numbers, those who are land-banking and mum-and-dad investors who are buying for their kids in the future.
A major do-up on Thompson Avenue, Dinsdale, also attracted multiple offers within a few days of being listed and sold for $600,000 to an investor who planned to renovate it and flip it. Another on Morris Road, Hillcrest, sold to a neighbour within just five hours.
Last year these run-down homes in decent suburbs would have been in the $700,000s, Yue said, but now they are selling at around $500,000 to $600,000.
But not all investment properties are getting picked up quickly, with those near the university towards Hamilton East and Silverdale proving harder to move despite the rents on them increasing.
“Those ones are dead, absolutely dead. No one putting in offer, no one wants it.”
This major do-up on Thompson Avenue in Dinsdale, Hamilton, also attracted multiple offers within a few days of being listed and sold for $600,000 to an investor who plans to renovate it and flip it. Photo / Supplied
Harcourts Mt Roskill owner Nick Kochhar said with banks now categorising a new-build as having code compliance certificates issued within the last six months, it is much harder for people to get lending for new-builds.
He is advising builders to hold off getting the CCC until as late as possible because they don’t know how long it might take for the house to sell, and there is a big difference between a 10% deposit for a new-build and a 20% deposit for existing homes.
“A 20% deposit is quite a lot of money, if it’s a $1.5m house – it’s a $300,000 deposit.”
Of the seven houses they are selling in a development, four have sold but the remaining three now can’t be classified as new because the CCC is now over six months old. “It’s crazy.”
While the tax rules for new-builds are more favourable for investors, Kochchar said developers or builders were still seeking out older homes on larger sites between 600sqm and 2000sqm in Mt Roskill, Blockhouse Bay and Mt Albert.
But despite there being a few more investors around, first-home buyers are still dominating the market.
“They can tell this is the bottom of it. This is the best time otherwise they won’t get any money from the bank.”
