At a Barfoot and Thompson auction in Auckland last week, five bidders pushed up the price of a run-down bungalow at 7 Erson Avenue, Royal Oak, to a phenomenal $2.71 million.
The result is even more surprising when you consider the property had a pre-auction offer of $1.8 million and a CV of $1.575 million.
Another house at 14 Wairakei Street, in neighbouring Greenlane, fetched $3.57 million under the hammer after strong bidding action drove the price well above the CV of $2.85million.
And at separate auction called by Ray White, a four-bedroom 1950s house at 185 Meadowbank Road, in Orakei, sold for $4.05million - $600,000 above CV.
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What all three properties have in common is their development potential. All sit on relatively large sections and are zoned Town House and Apartment (THAB) or Mixed Housing Urban under the Auckland Unitary Plan. That means the new owners can demolish the existing structures and throw up an apartment block or several town houses.
A bungalow on 1156 sq m of land at 14 Wairakei St, Greenlane earned its owners of 40 years $3.57 million, well above CV of $2.85million. Photo / Supplied
Agents and auctioneers say the strong prices being paid for properties with THAB or Mixed Housing Urban zoning suggest there’s confidence in development market.
Ray White agents Matt Gibson and Lauren Andreoli, who brought 185 Meadowbank Road to auction, said interest in the property was “exceptional”, with almost 50 groups coming through the opens homes.
“We had numerous developer enquiries. Some were just ordinary Kiwis thinking maybe adding one other house to offset the cost of their own new build; the others were full-time developers,” Gibson says.
“The developer who bought it is undecided about what he’ll build - he’s just taking advantage of the view the property offers.”
Gibson expects a spill-over of new listings, as the five registered bidders who missed out on 185 Meadowbank Road are still keen to buy. “Vendors are being rewarded, and that creates interest from neighbours,” he said
On the market for the first time in nearly 60 years, 185 Meadowbank Road, Orakei achieved $4. 05million, $600,000 over CV. Photo / Supplied
The Meadowbank Road site, overlooking the Orakei Basin, had six registered bidders, four of them active, fighting it out for the site, zoned Town House and Apartment. Photo / Supplied
Barfoot and Thompson agents Helen Lam and Dylan Tracey, who marketed 14 Wairakei Street as having potential for a subdivision, said the new owner plans to live in the house with their extended family and develop the land in the future.
She said the property’s zoning was a big drawcard for buyers. “Usually house values are high in Double Grammar Zone for obvious reasons but 14 Wairakei Street is outside catchment so we were quite surprised it fetched such a good price,” Lam says.
Tracey says the house was only on the market for nine days before a pre-auction offer of $3.1 million was made. The vendors, who had lived in the house for 40 years, were over the moon with the result. “The vendors were ecstatic. There may be some uncertainty about what lies ahead for the market, but right now we are achieving some great results,” he says.
Barfoot and Thompson agent Maree Currie says there is demand for large, unimproved sites. Last week she sold a modest 1950s house with water views on 736sqm section at 47 Dunkirk Road, in Panmure, for $1.601 million - $461,000 above CV and a satisfying $538,000 over its April 2016 purchase price. She sold a similar property at 69 Dunkirk Road during lockdown for $1.62 million.
Water views and flat sections are attracting developers to the 1950s homes on Dunkirk Road, Panmure, says agent Maree Currie , who sold this house at 47 Dukirk for $1.6 million, nearly $500,000 over CV. Photo / Supplied
Currie says this stretch of Panmure by the Tamaki Estuary is ready to take off, mimicking the growth of neighbouring Glendowie and Mount Wellington. “These are large sites, the owners have lived there for decades and their land values have gone up considerably.”
One the other side of Auckland, a 1930s house on a 953sqm section at 73 New Windsor Road, in New Windsor, sold last week under the hammer for $1.6 million. Its mixed housing urban zoning took it well above its CV of $1.185 million.
And a 1035sqm property at 20 Ozich Avenue, in Te Atatu South, sold for $1.35 million - $405,000 above CV. Zoned mixed housing urban, the property already came with resource consents for a three-lot subdivision or concept plans for eight terrace houses, giving would-be developers a jump on their project.
Barfoot and Thompson auctioneer Murray Smith says he’s seen a “good number” of developers at recent auctions. “There’s a heap of confidence with developers,” he says.
Colliers national director Pete Evans, who specialises in residential property development, says there are opportunities out there. “Developers are really embracing these times and can see seeing there’s continued demand at the affordable end of the market – that's under $1 million. They’re the ones buying up sites.”
Evans notes that developers who formerly focussed on commercial property are switching their business model to residential.
A 1930s house on a 953 sq m section with mixed housing urban zoning at 73 New Windsor Road, in the inner west, sold under the hammer for $1.6 million, well above expectations. Photo / Supplied
