It would have been unthinkable a year or two ago but it may not be too long before Mt Wellington becomes Auckland's next million dollar suburb.
It certainly appears to be heading in that direction.
Last week Bayleys auctioned a 1950s-era, three bedroom weatherboard house, at 8 Harwood Rd, Mt Wellington (pictured).
It had been refurbished with a nice big deck at the front, the timber floors had been polished, there was fresh paint and fittings and a smart new kitchen and bathroom.
But there was still the original galvanised steel garage out the back next to the clothes line.
So all in all, a pretty standard family home but in nice condition.
It sold for $865,000, still shy of the magic million dollar mark, but heading in that direction.
According to QV.co.nz it had been purchased in April 2011 for $493,000, so its value has increased by 75% in the last four years.
If it rises in value by 75% in the next four years it will be worth just over $1.5 million.
Which would turn Harwood Place well and truly into another millionaire's row.
Other results from Bayleys Auckland auctions last week included homes at Unsworth Heights $1.203 million; Paremoremo $1.09 million; Mt Eden $1.65 million; Muriwai $1.1 million; Titirangi $1.197 million; Sandringham $1.515 million; St Heliers $1.85 million; Cockle Bay $2.4 million.
There were even a few homes that sold for less than $1 million - at Beach Haven $667,000; Birkenhead $610,000; Greenhithe $760,000; Henderson $402,000 and an apartment in Parnell that went for $885,000.
Meanwhile down in Canterbury, Bayleys sold a 1940s-era, three bedroom home in "as is" condition (likely damaged), for $167,000.
See below for the full results of last week's Bayleys auctions, with photos of all properties, including those that didn't sell:
---------------------------------------------------------------------------------------------------------------------------------------
Our free Property email newsletter brings you all the stories about residential and commercial property and the forces that move these huge markets. Sign up here.
To subscribe to our Property newsletter, enter your email address here. It's free.
---------------------------------------------------------------------------------------------------------------------------------------
10 Comments
"According to QV.co.nz it had been purchased in April 2011 for $493,000, so its value has increased by 75% in the last four years"
A bit of sloppy reporting here.
The same story tells us that the house had been nicely refurbished.
Making the bald assertion that the value had increased by 75% is misleading if you don't take the value of the improvements into account.
And to extrapolate that out to 75% over the next 4 years. How are you going to add value when its just been done up? Sure spend a couple hundred thoysand poping to the top for 2 more bedrooms and add ibternal access double garage. House values go up when you spent allot improving the house. Who woulda guessed?
Even though Auckland, and NZ in general, has a high-cost economic structure, I cannot see how costs cannot be constrained when faced with this kind of house price inflation. Obviously rental inflation will be key: rents are more constrained by income than house prices. Low rental inflation appears to be an important indicator that we living in amidst a bubble that doesn't seem to be much different to those overseas. Nevertheless, there does seem to be a belief that this is all about neoclassical supply and demand as opposed to a market peppered with distortions. The only issue with this type of economic model is the extent to which it destabilizes the economy. I'm sure that there are more than a few within the power structures who are internally concerned about this, but their public face needs to communicate calmness and control.
And who knows? This could all be real and signify a golden era of prosperity.
Wage inflation and rent inflation is not matching house price inflation, so then what are the drivers
The no1 is cheap credit and all over the world it is piling into assets and overinflationing their true value. When one of the bubbles burst all hell will break lose
If the property industry is a key industry for us, and that includes the transaction industry, we want it to have a positive impact on income.
Matt Rognlie from MIT has produced some excellent research. He shows that the growing share of national income deriving from capital income has not been distributed equally across all sectors in the U.S.. Return on non-housing wealth has been stable since 1970, but house prices are almost entirely responsible for growing returns on capital.
Quote:
But his observation that it is homeowners in particular—rather than rentiers generally—who are grabbing a larger share of the pie is important for policy. Mr Piketty used the historical evidence in his book to argue that a global tax of up to 2% a year on individual wealth should be introduced in order to prevent capital concentrating in the hands of the few. But if housing wealth is the biggest source of rising wealth then a more focused approach is called for. Policy-makers should deal with the planning regulations and NIMBYism that inhibit housebuilding and which allow homeowners to capture super-normal returns on their investments.
http://www.economist.com/blogs/freeexchange/2015/03/wealth-inequality
No way in hell is Mt Wellington going to become "the next $1M suburb".
Sure there's houses in Mt Wellington that'll sell for over a million, and there has been for a few years now. I've looked at a number of them when I was looking to buy. But Mt Wellington is/was a prime first home buyer suburb that now represents very poor value next to the nicer parts of Otahuhu/Massey etc. It's got a long way to go and no major drivers to make it a $1M average suburb
Will Mt Wellington be a $1M suburb one day? Undoubtedly. But I'm sure eventually every suburb in Auckland will be. Mt Wellington Certainly won't be the next. Certainly Ellerslie, St Johns and Glen Innes will be before Mt Wellington is, and that's just in the neighbourhood. Onehunga, One Tree Hill etc are all far more desirable than Mt Wellington is.
After looking in Mt Wellington rather intently when I was in the market 2 years ago, it seemed like very poor value for your dollar there compared to other, nicer suburbs. The only other suburb that represented worse value was Glen Innes since there was a lot of "hype" around the planned redevelopment there which had boosted interest significantly.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.