REPORT IN NZ HERALD ON 05.09.2011
– ACTION IN THE AUCTION ROOM
As the world was on the brink of caving in just over a month ago, a bunch of
people in Barfoot& Thompson's Auckland auction rooms had more important
things on their mind: how much to bid for a small lump of land on the city
fringe a 10-minute drive to Queen St?
On a day in which the overall bidding action was fairly subdued and at times
non-existent, the competition for 1A Fowler Ave, Mt Albert, was dynamic.
What we had
here was a 610sq m section containing a derelict home in a pleasant
inner-suburb street in good school zones, just 300m from the Mt Albert village
shops ... and 100m from the railway line.
So when did land within the hiss and roar of trains become so much in
demand? No finite answer to that but after a couple of decades of in-fill
housing, finding a section close to the city center
is
gettingtough. Huge demand and tiny supply can mean only one thing, even with
the backdrop of potential economic mayhem in the United States and
clickety-clack at home.
A quick look
at 2008 rating values shows a $380,000 land valuation for 1A Fowler, and an
average of about $370,000 in the street. Mt Albert has done better than many
areas over the past three years, and the 2011 valuations - due in letterboxes
at the end of October - may see a rise of around 10 per cent or so.
On that basis, you'd think a starting point
for 1A Fowler Ave might have been a little over $400,000, with a
"competition premium" of perhaps 15-20 per cent pushing the price to
around $480,000. So much for theory.
The bidding
opened at $300,000, the "now selling" sign went up at $480,000 and -
30 bids later, after a total of 55 bids - the hammer fell at $541,000.
With the subsequent demolition likely to give no change from $20,000, that
puts the "clean section" at a touch over $560,000 - a lot of money to
pay for land close to a railway line. Perhaps the buyers got confidence from
the sale six weeks earlier in Baldwin Ave - three streets down and just as
close to the tracks - where a renovated three-bedroom bungalow on 697sq m sold
for $900,000 (against a 2008 rating capital value of $660,000).
Those sorts of figures may suggest Auckland real estate is firing. In some
areas, especially those close to the city centre, it is, fed by a lack of
listings as cautious property owners wait to see continued improvement in the
economy.
But buyers are fussy, going for homes which are wellpresented and demanding
value for properties which fall short of that mark. Leaky homes needing
remedial work - and even sound properties built in the style that has caused
problems - are being shunned.
Barfoot& Thompson sells more homes in Auckland than any other agency and
their auction this day was a strange mix of furious action and disdain.
Of the 28 residential properties on offer - covering west, central and east
Auckland, but none on the North Shore or in South Auckland - just 11 sold under
the hammer. Eight of the lots passed in drew no bids. An earlier mortgagee
auction was similarly restrained, with three sales from the eight properties on
offer.
Reports suggest many first-home buyers are staying clear of auctions because
they don't want to pay hundreds of dollars for specialist reports and then find
the "investment" is wasted as the price on the day moves above their
budget. Signing a standard agreement on an agreed price, conditional on the
reports, gives them more certainty.
But that concern doesn't hold everyone back for lower-priced properties, and
competitive bidding can bring some great results.
Take 8 Ambler Ave, Glen Eden, for example. Bidding for the renovated
two-bedroom home on a sub-dividable 1065sq m section opened at $250,000 and
quickly hit the $345,000 reserve. Two parties tossed around $1000 and $500 bids
from there to push the final price to $370,000 - a $25,000 advance on what the
owner would have been prepared to accept.
But the closer to Queen St, the higher value the prize, and 40 Warwick Ave,
Westmere, shows the value of location. The three-bedroom bungalow with all the
extras (but just one bathroom) on 434sq m went for $1.08 million. It last sold
in May 2008 (seven or eight months after the market began its decline) for
$780,000.
If anyone needed further evidence on the power of auction to squeeze the
best price, it came with unit 1, 2 Carlton St, Hillsborough. A pre-auction
agreement for $533,000 which the owners were happy to accept was pushed to
$573,000 under competitive bidding to provide a cool $40,000 premium.
