A run-down home in South Auckland has taken an almost half-a-million-dollar hit in less than 18 months after selling at auction this week for $773,000.
The Manurewa home is just of a handful of houses with development potential that was snapped up in the housing boom and is now being on-sold 18 months later at a hefty loss, as experts warn more forced sales are likely.
The mortgagee auction for the three-bedroom home on Funnell Place opened at $400,000 and quickly rose as a whopping 100 bids were placed by at least six would-be buyers.
The property, which has an RV of $800,000, last sold in November 2021 for $1.22 million, OneRoof property records show.
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The 1980s home, marketed as being ideal for families or investors, was on a 600sqm site and zoned mixed housing urban.
The unflattering listing photos showed a broken window at the front of the house covered with a piece of cardboard.
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Another three-bedroom, one-bathroom home on Antrim Crescent in Otara on a larger 736sqm section also sold under the hammer at Ray White Remuera for $750,000 – $180,000 less than its RV.
The auction opened at $400,000 with more than 50 bids placed by three buyers.
The 1960s weatherboard and brick home, according to its listing, would suit first-home buyers, young families or investors and even had a separate teenage retreat or work-from-home area at the back of the section.
It last changed hands in 2015 for $460,000.
Ray White listing agent Cherry Killgour, who marketed both properties with Ari Starr, was unable to comment on either sale.
Meanwhile, two other properties to be sold by mortgagee sale passed in at a Barfoot & Thompson auction on Wednesday.
The entry-level, four-bedroom, two-bathroom home at 17A Paramu Avenue in Birkdale passed in at $826,000, and a two-bedroom home at 2/13 Estelle Pace, in Farm Cove, also passed in at $480,000.
CoreLogic chief property economist Kelvin Davidson said it was not surprising mortgagee sales were picking up – albeit slightly – because of the pressure on developers and mortgage borrowers.
"It's not going to be pleasant, but let's face it interest rates are high."
However, he said mortgagee sales were always a last resort and banks worked with borrowers to avoid forcing a sale by doing things such as repayment pauses or increasing the term of the loan.
The number of mortgagee sales was still nowhere near the levels during the Global Financial Crisis when they reached a high of 768 in a three-month period and Davidson doubted they would reach that level again.
Valocity head of valuations James Wilson said mortgagee sales still made up less than 5% of all sales and those that were happening were spread across all types of owners, not just investors or developers.
However, he said properties with older homes on sites between 700sqm and 2000sqm in areas such as South Auckland which were bought for their development potential between 18 months and two years ago were now selling with some big price reductions. This could be because of the rising building costs and because they were not viable for bigger developers and smaller developers without a track record would struggle to get funding at the moment.
Some of those developers or investors had decided to get out rather than continue to stomach further holding costs, he said.
South Auckland Harcourts business owner Harsimran Singh told OneRoof last month that some sellers who had purchased development land in 2021 were now suffering and were reselling at major losses.
Analysis by OneRoof’s data partner Valocity show individual properties that were bought in 2021 were now selling for anything from a few hundred thousand dollars to half a million dollars below what they got back then.
And some properties have suffered even bigger losses with a 100-year-old Sandringham bungalow selling at a mortgagee auction in March for almost $1m less what it sold for just 18 months prior.
The four-bedroom character home in Sandringham was purchased in October 2021 for $2.56m, above its CV of $2.25m, and resold at Ray White Remuera's auctions on Wednesday for $1.611m.
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