At recent Auckland apartment auctions there were plenty of potential buyers and they weren't afraid to bid but everything that sold went for less than its rating valuation

At recent Auckland apartment auctions there were plenty of potential buyers and they weren't afraid to bid but everything that sold went for less than its rating valuation
This apartment in the Sugartree Centro complex sold for $489,000.

Auckland apartment auctions are getting back into full swing and although there are plenty of buyers about they remain cautious on price.

Interest.co.nz attended the two main Auckland apartment auctions this week, the first conducted by City Sales on May 27 and the second conducted by Ray White City Apartments on May 28.

The most obvious feature at both auctions was that buyers for apartments remain active, with all of the properties offered receiving bids and nearly all of them receiving multiple bids.

However while buyers were active, they remained very cautious on price, and bids remained well below the properties' Rating Valuations (RVs).

At the City Sales auction four properties were offered and all attracted competitive bidding but the bids were all below the RVs and none was high enough to get them across the line, with all passed in.

Here are details of the four properties offered and the bids received:

  • 3A/30 Randolph St, Eden Terrace. Montpellier building. 54sqm, 1 brm unit with balcony and tandem car parks. Vacant. RV $430,000. Received bidding to $370,000. Passed in.
  • 314/57 Mahuhu Cres. Hudson Brown building. Downtown. 65sqm, 2 brm, leasehold unit with a car park. Received bidding to $220,000. Passed in.
  • 103/43 Virginia Ave, Eden Terrace. 55sqm, 2 brm unit with a balcony and car park. RV $500,000. Received bidding to $460,000. Passed in.
  • 809/147 Nelson St, CBD. Sugartree Altro building. This complex was completed late last year. A 46sqm, 2 brm unit with a balcony. Tenanted at $550 a week. RV $600,000. Received bidding to $430,000. Passed in.

At the Ray White City Apartments' auction on May 28, four apartments were offered and three sold under the hammer. Here are the details:

  • 205/145 Nelson St, CBD. Sugartree Centro building. 58sqm, 1 brm unit with study and a balcony and storage locker. RV $500,000. Sold for $489,000.
  • 1014/53 Cook St, CBD. Aura building. 49sqm, 2 brm unit with a balcony and a car park. Rented at $460 a week. RV $490,000. Sold for $417,000.
  • 609/363 Queen St, CBD, near Myers Park. Quest building. A 32sqm studio with balcony. Vacant and not included in the hotel pool, but offered fully furnished. Passed in with a top bid of $280,000.
  • 2K/3 Keystone Ave, Mt Roskill. Keystone Ridge building, around the corner from Mt Roskill shops. A 30sqm studio with a balcony and car park. RV $280,000. Sold for $250,000.

Similar trends were evident at the Ray White City Apartments' auction on May 21, where competitive bidding was received on all of the apartments offered, but all of the bids, including those in the properties that sold, were below their RVs. Here are the details:

  • 604/10 Ronayne St, Downtown. The Landings building. A 50sqm, 1 brm, leasehold unit with a balcony and tandem car parks. Sold for $170,000.
  • 2B/125A Hobson St, CBD. The Imperial building. a 65sqm, 2 brm unit with a balcony and a car park. Vacant. RV $600,000. Sold for $490,000.
  • 6D/100 Greys Ave, CBD. Amora building. 34sqm studio, vacant and not part of the hotel pool. RV $300,000. Sold for $240,000.
  • 222/184 Symonds St, Grafton. Citta building (Cnr Symonds St and Khyber Pass Rd). A 53sqm, 2 brm unit. RV $430,000. Sold for $390,000.
  • 10/68 Mountain Rd, Mt Wellington. A 90sqm, 2 brm unit, with a balcony and tandem car parks. Furnished. Vacant. RV $510,000. Sold for $500,000.

Details of all of the properties offered at the auctions monitored by interest.co.nz are available on our Residential Auction Results page.

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93 Comments

24
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Shock horror. Who would’ve thought?!

12
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Looks like drop your price by 10% if you want it sold. Its possible prices could fall 15% or more in 6 months time. Looking for 2017 CV you are probably dreaming now I think.
We wont be immune from worsening international situation.

14
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Yep looks like pretty much that buyers want 10% off the RV and they want it NOW and are not prepared to wait. Sellers obviously expecting even bigger drops are coming and are already accepting this. This is just a sign of things to come across the board. Everything will be down at least 15% before Christmas.

Ben, it was .5% which is next to nothing and it was in Ozzie!
Let’s see what happens in Nz and personally don’t think The median will drop much anywhere.
With interest rates so low now would be a great time to be buying if the figures look good and you can get the money!

That's a very DRAMATIC fall, the worst is over and prices will soar from now on

29
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The auctioneers are planning to add virtual crowd noise for added atmosphere and engagement for buyers

19
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With a subliminal repeating FOMO loop track mixed repeating in a whisper; "Bid now or you'll miss out!" :)

30
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Auckland apartments have been over-priced for years. Most of them still have weathertightness problems. And dysfunctional body corporates are common.

If you’ve got any sense, you’ll stay well away from them......

TTP

32
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There goes the first domino!

30
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i just liked your comment TTP - a first for me.

17
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Hacked account?

I liked your post CJ and IO liked TTP post, what is happening that would cause this. The whole world is upside down and inside out right now.

I liked your post as well there Houseworks. We can call a ceasefire for a while eh?

The world has been upside down and inside out for some considerable time now.

I guess we all need a bit of humor in times like these HW. :)

15
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This is the reality, will get worse in coming months.

https://www.landlords.co.nz/article/976516891/tough-servicing-tests-remain

So banks setting the rate at 6-7%. That would massively effect yield and thus price. Do your own math.

14
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Let's hope anyone who has decided to 'ride this one out' has the capacity and time to do so. (A view from the US this morning)

"First the deflationary deluge, then the tsunami of inflation."
The majority refuse to sell until it's too late. They believed the fairy tales that "real estate never drops," Apple is a bargain at $300 etc., and are unwilling to suspend those beliefs even as the deflationary deluge washes away their wealth.
By the time they realize the impossibility of getting their wealth back, it's too late to do anything other than salvage what's left by selling now rather than later.
Bubbles tend to rise and drop in rough symmetry, meaning they tend to retrace the entire bubble, though the descent is often much faster than the ascent.
What made this possible? An equivalent bubble in debt.
The price of assets is set on the margins. In a neighbourhood of 100 houses, the price of all the houses is set by the most recent handful of sales. If each house was valued at $1 million, and three houses sell for $800,000, the value of the other 97 houses falls to $800,000 each.
But the greatest and most dangerous fairy tale of them all is "the Fed has our back."

(CH Smith - it is a much longer piece, but we get the gist)
https://www.oftwominds.com/photos2020/bubbles2-20.jpg

Hyper inflation sounds wonderful for those with large mortgages, just like in the 1980s, borrow big and your loan shrinks in real terms

I don't understand that argument.

High inflation would result in high interest rates which when there is a large amount of debt means pain and lots of it. And many are talking about stagflation - so wage suppression and high unemployment. That would be the highest score on the misery index (high inflation, high unemployment).

Could someone tell me how this is a good result 'like the 1980's...'?

Exactly the big difference is in the 1980s high interest rates kept a lid on house prices/DTI ratios.
What i think could happen is rates creep up resulting in perverse table mortgages where the interest portion remains fairly static.

E.g. $500k mortgage at 3% for 2 years = $30k in interest. Refinance for another 2 years @ 3.3% on $473k = $30k in interest etc. Interest rates increasing to plug the gap where the interest payments in dollar terms typically shrink over time.

it all depends whether wage inflation keeps up with CPI inflation. if it does, your debt becomes much smaller relative to your income, and you tough it out for a year or two then life is sweet. It it doesn't then yeah, you're screwed.

Correct, provided incomes increase along with the inflation then all OK..

How could that be if businesses are all defaulting because of their debt levels?

Hi everyone CFO here - our business is about to default on our debt obligations but here is a pay rise for everyone. Can't see it.

Same applies to them, if their revenue increases more than their cost of goods sold, then their gross profitability goes up, they can afford payrises. Too much leverage of course and that increased gross profitability all goes on servicing the debt, they lose the good workers to companies that weren't so leveraged and are increasing pay, and the downward spiral starts.

which with high unemployment it wont!

Interesting story IO, is that in the USA you can actually fix the rate of your mortgage loan for 30 years. Imagine that. The markets do what they want and you’re fixed at say 6% or whatever. Obviously this doesn’t make you immune to rental value deflation, or asset value deflation. But if you have a tenant in your investment home, and rents stay somewhat stable, and your mortgage and outgoings are covered by the rent, it’s not a bad place to be.

And yet, look what happened in the GFC. Landlords dumped their investments like you wouldn’t believe. Imagine what could happen in NZ and Aus with hugely inflated property values, behemoth mortgages, landlords already propping up costs and making a monthly loss (because, you know, home values always go up so it’s worth a few extra bucks a month for the equity increase), and then the interest rates rise a bit.

It also came with inflated interest rates, like 18% for your mortgage, that would be fatal for most.

Again I am somewhat surprised and encouraged by these results. Fairly normal results that we would have seen at times last year. Certainly not a dramatic change. Apartments actually sell under the hammer even leasehold ones in times such as these - think about it.

I imagine if the figures work out and rental yield is sufficient or the cost to the buyer is significantly less than rent then it will sell. Low interest rates now and for the foreseeable future are responsible for this.

'Again I am somewhat surprised and encouraged by these results'.... cue crowd noise

'Fairly normal results that we would have seen at times last year. Certainly not a dramatic change. Apartments actually sell under the hammer even leasehold ones in times such as these - think about it.'... crowd going wild

'I imagine if the figures work out and rental yield is sufficient or the cost to the buyer is significantly less than rent then it will sell. Low interest rates now for the foreseeable future are responsible for this.'... this is it, huge applause and shouts of encore, let's whip the crowd into a frenzy

Ps sorry ZS I know you're a good sport and wont mind me adding these notes for a bit of tongue in cheek fun. It's good that so many apartments sold although for slightly less money than one might think compared to the RVs. The RVs seem toppy to me. Thanks for the good post cheers

An erudite "The Man 2" comment. To TM2 - What are your thoughts...?

ZS YES I agree with you with relates to last 2 weeks auction results (only quality freehold property sold above RV), was mainly due to pent up demand after lockdown and also cashed up Kiwi expats returned b4 Lockdown. But don’t get too overwhelmed with last week’s trends, as it’s already getting sticky down the track start this weekend.

12
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A sign of things to come...

16
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Is it the beginning of the end of Bull run for now.

11
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I’m seeing quite a few of these consented projects that haven’t got off the ground being listed recently. Seems many developers have bitten off more than they can chew.

https://www.trademe.co.nz/property/residential/sections-for-sale/auction...

"Seems many developers have bitten off more than they can chew."

Do you think this a developer or land banker hoping to sell to a developer?

Have heard stories of land speculators accumulating land to sell to developers.

FYI this land was purchased in Dec 2015 for $3.015mn. Now under mortgagee sale. People think that land prices can't fall - this is how land prices potentially fall (and remember this is an input into construction costs).

Yeah could be either I guess. It’s a beautiful site. Someone might pick up a bargain.

FYI, here is one land seller who was desperate to sell in 2019. Address is 46 Upper Queen St, Auckland.
Owner paid $7.5mn, and land was valued at $4.31 mn in 2017.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=122...

July last year...

Very irregular shaped site. Nice view. Could put a nice big family home on it but any density play will be compromised by the shape.

21
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Housing market is standing on the edge of the Cliff.....Just wait......

Nope. Prices will keep climbing. If they can in Zimbabwe, they certainly can in Auckland. While Harare is a lovely city, you can’t compare it to Auckland or Wellington. Here is a small two beddie, in an ok suburb of the Zim capital for just shy of 400kiwi$.
If prices in a virtual failed state can still be so high, they surely can in Nya Zeelan’...
https://www.property.co.zw/listings/2-bed-commercial-property-for-sale-a...
You could do better for a similar house in Christchurch.
What about this three beddie in Kigali, Rwanda?
A mere 600kiwi$
https://www.knightfrank.com/properties/residential/for-sale/kicukiro-kig...
And then there is this cute three beddie in Tripoli, Libya for just short of 400kiwi$ https://www.propertyfinder.com.lb/en/buy/apartment-for-sale-north-tripol...

Lol.

"Prices will keep climbing."

General HubHub,

So you mean like this?

i) Where from 1974 -2020 (46 years) the house price index went from 100 to 2,843. (i.e 28.43x the original index value in 46 years). FYI, that is 7.55% per annum.
a) what do you believe has been the key drivers of this price increase?
b) do you believe that the key drivers will continue into the future?

ii) So if we extrapolate this historical rate of growth of 7.55% per annum into the future, the house price index in 2066 (46 years from today) will be 80,849 (i.e 28.4x today's value).
a) does that seem reasonable to you?
b) if so, what (if any) are the limitations from the house price index reaching this level in 2066?
c) will any recent hard working owner occupier buyers, using high amounts of leverage, become collateral damage along the way?

(Note: for sake of reference, some property promoters frequently espouse that property prices double every 10 years - that is equivalent to 7.18% per annum.)

https://www.interest.co.nz/charts/real-estate/qv-house-price-index

You’ve probably missed my point. Which is, if prices haven’t gone over a cliff in Harare, Tripoli and Kigali, two of those exist in failed states, there is the strong possibility, prices won’t collapse here.

Yes I missed your point.

OK, thank you for your clarification.

Except the USD prices quoted on the real estate sites are "International Purchaser" rates and not indicative of a straight currency conversion. Multiply the ZWL rate by 0.003 to give you an actual equivalency.

Because NZ prices haven’t been and aren’t affected by overseas buyers, right? Oh that’s right, we have the foreign buyer ban... phew, fortunately that can’t be manipulated and scammed.

"What about this three beddie in Kigali, Rwanda?"

Ever been to Kigali, Rwanda? The war museum serves as a reminder of the horrific effects of the Rwandan civil war between the Hutus and the Tutsi in the mid 1990's.

I have been to Kigali. Lovely city. I was in Goma, Zaire (DRC now) at the height of the genocide, so know a little bit about it...

"I was in Goma, Zaire (DRC now) at the height of the genocide,"

Wow. Crikey.

i) What the heck caused you to be there at that time?
ii) How long were you there?

Were you in other potential "hotspots" during their times of civil unrest? - Tripoli, Libya and Harare, Zimbabwe

I have spent quite a bit of time in Zimbabwe. Lovely people there.
Never been to Libya... too scared...

".. too scared..."

Reminds me of being pulled over at night on a dark deserted street with no streetlights in Nairobi, by 2 agitated soldiers with AK47's, who then got inside our vehicle sitting next to us, so we were trapped and unable to leave the vehicle ... Felt like a hostage situation.

.

Scary stuff. Thank goodness for the local Zairee truck driver.

We saw in the museum in Kigali the horrific stuff that went on during the civil war in Rwanda - the Rwandans want a reminder of those atrocities so that they don't happen again. We visited an orphanage in Rwanda where the parents had been killed in the civil war.

Those life experiences really puts life in perspective, and makes people realise what really is important.

Had a relative serve on a NZ peace keeping mission and another friend who was a pilot ferrying in UN into hot spots in Africa. They had some interesting stories. The pilot told me that the plane he flew is now abandoned in some country in Africa.

If you served with the NZ Forces, then thank you for your service. Take care of yourself.

.

Pretty sure the two prices ($ZWL and $USD) are mutually exclusive i.e. Foreign Buyers purchase in USD with some ridiculous levy built in.

In the first example, how does 6,000,000 ZWL = 240,000 USD? Doesn't 1 ZWL = $0.003USD? So the house is worth the equivalent of $18k USD on the domestic market, not $240k.

Never appealed to me to invest in apartments. Kiwi dream is your own piece of dirt not in shared ownership. Even the multiple townhouses being stuck to each other were selling at absurd prices. Imagine being stuck in one during a pandemic. Hopefully these crap developments stop now and people stop buying these. Why not rent instead

19
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Real action will not be evident til wage subsidy phase 1 expires in mid June

Which is half way to the six month mortgage holiday.

14
up

Coming to a street near you...

Am pretty sure from previous crashes apartment prices are the first to drop, a leading indicator. Don't they fall first, faster and deeper?

11
up

Wait for those apartment projects that are nearing completion. Some of those off the plan buyers may be :
i) unable to settle
ii) and choose to sell

Remember this off the plan speculator? https://www.stuff.co.nz/business/114814271/if-flicking-an-apartment-was-...

Some buyers may choose to not complete the sale if their contract allows and prefer to lose their deposit

Priceless

"And perhaps - although it seems improbable - she didn't realise it would be hard to get a loan on a small apartment with a small deposit, on a student's income."

12
up

Typical RE agent, throwing her own daughter under a bus like that. They often drink their own kool-aid.

When you say previous crashes there is really just 2008 gfc. That was it's own special case following the blue chip fiasco. Since then we have been under building.

Looks like bidders are looking for around a 10% discount on RV

Im not sure that is enough

10
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Yeah 10% to start of with for now but why buy now when every indicator suggest that house price will fall - FHB have already missed the last boom so waiting for few more months may help, not to wait forever as anytime is good time for FHB buyer to buy a house BUT not when Better times are ahead.

Until they see that others are already getting a 10% discount, then they'll be looking for 15%..

17
up

Greg, thank you for the putting the sales price in context with the RV's. Useful.

11
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Good article Greg, thanks very much.

Auction report 14 waterview rd west takanini
homes.co.nz - Search for a property
https://homes.co.nz/app/area/takanini/14-waterview-road-west?x=174.93484...
Homes estimate may 2020 640k
CV 2017 600K
Well bid at auction this week, 44 bids made by 4 bidders, sold 906K

Section with 921 sq mt of land.

Bought by potential developer of infill housing?

Let's hope so CN

Houseworks

Thanks. That's what I was thinking. Could have 3 dwellings on a land section of that size perhaps?

Infill developers are one of the categories of buyers of a house on a large section that can pay higher prices as their financial economics are very different to that of owner occupier buyers, and long term tenant landlord buyers.

Owner occupier buyers of these types of properties with large sections are being priced out of the market and unable to compete on prices paid.

Let's hope it was a developer as we need more of them to maintain housing supply and for replacement of older housing stock. As well as they can provide employment during a recession therefore stimulate the economy

Auction 147A Arney Rd Remuera
Free property data for 147A Arney Road, Remuera, Auckland - homes.co.nz
https://homes.co.nz/address/auckland/remuera/147a-arney-road/l5wv9
Homes Estimate May 2020 5.49m
CV 2017 5.6m
Well bid at auction this week sold 8m (reserve 6m)

Section with 1,489 sq mt of land.

Purchased by infill developers?

Comment above ditto

Heres the auction video for your pleasure
Watch "Auction Live Stream: 147A Arney Rd, Remuera Auckland 1050" on YouTube
https://youtu.be/MOot3_x8Ioc

To be fair, most of the apartments that went up for auction were very small, and hardly attractive as an investment point of view for capital gain.
Personally we have got quite a few ownership flats but apartments are never on our agenda for several reasons.
Christchurch hasnt tended to build these small apartment boxes like they have in Auckland.
The closest to an apartment we have is pretty close to central ChCh that we have owned for approx.10 years and paid $205,000 for it.
The thing is that it is 120m2, 3 level with double garage, so effectively nearly 3 times as big as some of the small apartments being put up for sale.
No Body Corp and rental return just under 10% on purchase so with interest rates at under 3% why would investors even look at selling?

Once again The Boy shows his total ignorance. You need these types of apartments in Auckland because so many people want to live there and land is scarce. Christchurch is different from Auckland. People don’t want to live there and land is therefore not scarce.

Yes I did like Christchurch before the earthquake but now its stuffed.

Gordon, houses in Auckland are expensive because the city is run by an incompetent council that just lost half a billion dollars and has mismanaged the water supply.

Gordon, what is your problem?
You only tend to post after I have posted something!
Your jealousy seems to have no bounds, but rest assured that “The Man” is doing just fine with his investing in the beautiful city of a ChCh.
If people want to live in small boxes, have congested roads, high living costs with not much income then that is their choice Gordon.
There is far better living around NZ, but bear in mind Gordon most of the increased population is coming from immigrants which I certainly Am not jealous of.

His best days are behind him unfortunately

We will all note that you are a racist also The Boy. You should use your clutch before engaging gears. If Auckland is so bad why do so many people choose to live there? We all know why Christchurch continues to stagnate. No explanation needed.

Gordon, you call me a rascist?
Look at the crap that is going on in the United Stated at the moment!
The chaos that is going on has nothing at all to do with the murder of George Floyd!
It is just blatant anarchy and thuggery and the looting and violence from those people are using the death as a reason!
The police shouldn’t have done what they did and the cops will get punished for it, but it does not justify these thugs doing what they are to America by looting and burning buildings.
Gordon you couldn’t condone the looting And burning from these less than desireable people.

The Man, please take a look at this property and tell me what you think whether it's very good value next to golf course and renovated. Asking 449k.
https://homes.co.nz/address/christchurch/avondale/74-waratah-street/8DDa...

Housework’s, yes it looks like being pretty good value, and with the interest rates so low a good positively geared property.
Being next to the golf course as well is appealing!
Haven’t looked at the etc scope of works etc. but providing floors level etc. would be appear to be good value.

South-East facing yard will make it less appealing to some.

House hunter, most people don’t seem to worry too much about where outdoor living is nowadays.
Sections always sell on the Southside of subdivisions and therefore most have a warm sunny north facing garage.

Happy car, shame about the children.