Two successful auctions of do-up homes in the upmarket Auckland suburb of Remuera highlight how the scarcity of stock is influencing buyers who would really rather buy renovated properties, says Ray White agent Steve Koerber.
A 1970s time capsule property in Richard Farrell Ave and a plaster home on Loreto Heights that once belonged to the University of Auckland both saw “cautious” bidding last week, with Koerber expecting substantial sums will be spent by the new owners in renovating.
The Loreto Heights home made the headlines at the end of 2020 when it was reported the university had to offload the 1990s “boutique mansion” for $1m below its then CV of $4.05m. The property, which had been bought for its former vice-chancellor in 2004, had weather-tightness issues and subsequently saw its CV tumble to $3.5m.
Last week, the house sold at auction for $3.1m – slightly more than $2.965m the vendor paid for it in 2020.
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Koerber said six bidders had registered for the auction but because the property was a “major do-up of sorts”, only three took part, with bids coming in cautiously.
“Being a plaster home I think most people looked at it as a reclad opportunity,” the agent said, adding that the property was 90s original. “It had the old square terracotta tiles inside and big curved windows, massive staircase with a dated chandelier.”
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Koerber thought the new owners would be looking at spending $1m to $2m to bring the house up to date, but end value could well be worth the spend for the location.
“You've always got to look at the end value of a home, and the end value of any home there is easily $6m to $7m in today’s market. That area, freehold, elevated, north facing harbour views, it’s pretty cool.”
Koerber said the buyer had sold a more expensive home last year and would have preferred to have bought a home ready to move into but relented and decided to do “one more do-up”.
A huge factor in forcing people to reconsider and renovate themselves is the scarcity of stock, he said.
Properties in the $3.5m to $4m range are so sparse this is probably blocking sales further up in the $5m to $10m range because those potential downsizer sellers have nowhere to go other than an apartment, but many people don’t want apartments.
The property was billed as a major do-up. It made the headlines in 2020 when it was sold off by the University of Auckland for $2.97m. Photo / Supplied
An original 1970s home on Richard Farrell Avenue, in Remuera, Auckland, sold under the hammer for $1.735m. Photo / Supplied
“If they don't want to go to an apartment, then they're totally stuck. If they want to go to an apartment, no problem - lolly shop.”
The 1970s house in Richard Farrell Avenue also saw bidders hold back in order to have money to renovate, Koerber says.
The property had six registered bidders with three or four active on the day and the property sold for $1.735m, under the CV of $2.175m.
“If it was a more done up home it probably would have been closer to the CV,” said Koerber, who describes the original 1970s carpet purple/pink carpet as pretty funky for the time but well out of date.
However, the house had “massive obvious potential” with the possibility of creating a rumpus room or a fifth bedroom, but, again, a substantial amount of money would be needed to transform the house.
“Someone could spend up to $500,000 doing it really well. I think it would be a minimum of $200,000 to spend to make it a modest sort of home that most people would be comfortable living in.”
Ray White New Zealand reports it scheduled 115 auctions last week, up 15% on the week prior and 23.7% up year on year.
The a clearance rate was 54.3%, up 2.9% year on year, and bidder numbers held steady at an average of 2.5 registered bidders and two active bidders per auction.
A four-bedroom home on Bassett Road, in Remuera, Auckland, is now under contract after passing in at auction. Photo / Supplied
Lead auctioneer Sam Steele said auctioned properties stay on the market far less days than other sales methods, and he highlighted the sale of the Loreto Heights property by Koerber as the top result for the week.
Koerber also says a property in Bassett Road, which did not sell at auction recently, is now under contract with back up interest.
The property is being advertised for $3.3m, which is $800,000 under CV, but Koerber says CVs can be misleading and the property has some sloping, unusable land running down to a creek.
“Whenever we price a home that's a reasonably sharp, attractive price there's always going to be interest,” he said.
Koerber said the market was now pushing up against the election and he did not think many listings would hit the market within the next few weeks.
The dilemma for vendors is whether to list now and potentially be successful in a market with few listings, or wait until after the election when there may well be a “stream of buyers” who have been waiting for more listings to come on.
Whatever the election outcome, Koerber expects the second half of October to be extremely busy for real estate agents who will have to face a thinning out of open home numbers because of all the competition.
“We'll do open homes in these beautiful new listings and we'll be thinking ‘where is everyone’ and the answer is they are getting through all the other open homes.”
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