Apartment buildings with remediation and seismic strength issues didn't deter investors who were prepared to take a punt at the latest apartment auctions

The Imperial Gardens complex on Hobson St

Residential property auctions are continuing to slowly build in Auckland as the market heads towards March, which is usually the busiest month of the year for property sales.

Early indications are that the number of properties going to auction could be a bit down on last year although the sales rate appears to be about the same.

In the week from February 3 to February 9 Auckland's largest agency, Barfoot & Thompson, marketed 60 properties for auction and achieved sales on 19 of them, giving a 32% clearance rate.

The rest were mostly passed in for sale by negotiation, while a few had their auctions cancelled or postponed.

And there was some interesting bidding at the latest Auckland apartment auctions.

At the City Sales auction on February 13, three apartments were offered, two of which were facing remediation issues and the third was an apartment in a new development that's yet to be finished.

First up was a two bedroom unit in the City Gardens building on Albert Street, which is facing remediation work, which was followed by a three bedroom unit in the Imperial Gardens complex on Hobson St, which also has remediation issues.

Buildings that have remediation issues can be a minefield for inexperienced players, but there can be surprisingly good interest in them from experienced investors prepared to take a punt that the value of the building once remediation is completed will be more than they were willing to pay plus the costs of the repairs.

It's not usually such a happy story for the vendors though.

Both of these units attracted multiple bids with the City Gardens apartment selling under the hammer for $282,000.

According to QV.co.nz it had been purchased for $230,000 in 2006 and had a current (2017) rating valuation of $330,000.

The Imperial gardens unit also attracted multiple bids but was passed in at $175,000 and was sold later that day in private negotiations.

The final unit at City Sales was a ground floor studio opening to a central courtyard in the Union & Co complex currently under construction on Union St.

The building is due to be finished in the next few weeks at which time titles will be issued and owners will take possession of their units.

The marketing material suggested there may have been some urgency to the sale, stating; "This has to be sold!"

However the only bid for it came from the auctioneer on behalf of the vendor and with no one else prepared to raise their hand, it was passed in.

At Ray White City Apartments four apartments were on offer, including one in the Altitude building on Kingston St which is facing potential seismic strength issues.

There were multiple bidders for the property although they were cautious on price and it was passed in for sale by negotiation.

The other three were more regular apartments that could have appealed to owner-occupiers or investors and all attracted bids. But just one of the three sold under the hammer.

The results of these and other auctions monitored by interest.co.nz are available on our Residential Auction Results page.

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43 Comments

"Early indications are that the number of properties going to auction could be a bit down on last year although the sales rate appears to be about the same"

Not the impression I'm getting from following new listings in my area. 60% are trying there luck with auctions, another 20% are tender/deadline sale and maybe 20% are with a price or negotiation

The method I prefer when buying is upfront price, you have a vendor starting point. My least favourite would be tender, you have no idea at all what others will offer, but go in low and hope for the best.

Something similar coming to a marketplace near us?

"... homeowners are spearheading the start to this year’s prestige market as they rush to sell up before new laws take effect scrapping their tax exemption entitlements. Agents say vendors have given them until June 30 to sell and settle on the sale of countless properties before proposed laws are enacted removing the capital gains tax exemption..."
https://www.domain.com.au/news/expats-and-foreigners-hit-prestige-market...

As a former expat it sounds fair and is something to think about in the upcoming CGT recommendation. Many expats rent out the family home when away and if away for long enough don’t intend to return to that house so there needs to be a point where it’s classified as a rental and subject to CGT.

I have a hard time feeling sorry for ex-pats who live overseas and don't pay taxes on the wages they earn somewhere else, which they use here when they return to buy houses in a supply-constrained market pushing prices up. Maybe we should put the interest of New Zealanders living here and paying taxes here first.

The simplest way to do this is set the rules based on tax residency. If you are a non resident for tax purposes then all property in NZ is subject to CGT, and you should lose the right to send family back for free education or healthcare. You should also have the pension payout discounted as well.

Yep. Lots of kiwis in Aussie who pay no tax in NZ and freeload health and fully plan to freeload the pension. Thought the rules have already changed around this?

I think they are charging re pension eligibility.

Bit of a balancing act here though - expats still have rights as NZ citizens. For every expat that leaves there is at least the same number of visitors (or more) who come here to pay taxes then leave to offset. It’s likely a zero sum game.

What???? Ex-Pats pay tax wherever they are domiciled, it's kind of the law. It's complex and depends on jurisdiction, many of which have tax on world-wide income (Australia, UK). So you don't just get off tax-free.

I became an expat to better my situation. It was never tax free, but it had tax advantages. Even so, those taxes went to other countries' coffers and didn't fill the NZ trough I will drink deep from in seven years.

The reality is the best and brightest do head offshore to see the world And better themselves financially. There are other ways you can give back to Nz if and when you return

Get a bargain in the autumn sales! Add Deadline to the D list of vendors under pressure - divorce, debt, death(estate sale) .....

"About 650,000 borrowers with loans totalling around $230 billion are 'trapped' in their interest-only loans and could struggle to refinance, forcing many to sell into already deteriorating property markets"

https://www.afr.com/real-estate/interestonly-loans-worth-230-billion-tra...

That Mosman mansion can’t equat to The Hamptons

BW,

The potential reasons for selling by non owner occupier property owners:

1) interest only loan becoming a P&I loan
2) potential ring fencing of tax losses for individuals
3) potential capital gains tax
4) negative cashflow properties purchased with the intention of capital gains, and owners revised expectations of future capital gains
5) costs of meeting healthy homes bill - particularly insulation
6) for property renovators - market price is below purchase price and renovation costs

If resulting market price changes are significant, then overlay on top of that, the negative price feedback loop ...

I dont think so CN, sorry to burst your bubble...most property owners will sit it out longterm unless forced to make a potential loss decision

Thank you for your feedback. Not sure what you're seeing.

FYI,

https://www.radionz.co.nz/news/national/367762/proposed-regulations-prom...

No sign of desperate sales in the latest auction results. I thought I saw one but when you compare what it last sold for it appreciated at an acceptable level.

Like mainland cheese....give it time.

You think 1/109 Burnley Terrace was a fair price?

and 219 Godley road?

Burnley Terrace went up by about $1200 a week for the owner. Only three bedrooms, one bathroom and no garage. The vendor may have hoped for more but it sold on the day and they made a good profit.

Godley Road is a Lockwood style which only appeals to some people. It is hard to transform into anything else. Built in the 80s it is likely starting to get a bit tired. Houses around it are valued similarly. It's a fair price but not a bargain.

What ever happened to Dgz.would be good to hear his perspective

That is not what i asked. I was curious because it went for ~20% below RV, and from the information I looked at, homes.co.nz and the listing photos I couldn't see any good reason for it. No pylons, no leaky rotbox construction, not extremely rundown and in need of a freshen up. So why so far below RV?

The RVs are currently out of whack. I had a house that had an RV 800K over its market value, yes 800k. No garage, one bathroom, not DGZ. A price appreciation that was on a par with all other Central Auckland houses of this value, ie $1200 a week. This is the ZS system and it is in accordance!

Seems the CVs aren’t out of whack when a house sells 20% over, is it only when it sells under CV that they’re wrong?

When analyzing a single house sale previous sales figures are the significant numbers to look at. CVs are more useful when averaging out over as large a number of sales as possible to give a general impression of which way the market is headed. That way the the overs and unders balance themselves out.

Did you read the herald about the block of wgtn units given to Historic Places. Central location bought for 74k in 1979 now worth 1.6m, wow. Great to see another investor owner taking good care of their investment property and tenants over the longer term.
Interesting that over 40 years they had compound capital value growth of 8 percent pa. And the valued doubled in value on average every 9 years. CGT if it comes in will have to be based on a start date valuation because anything else would be completely unjust, expecting them to have a cgt value of the purchase price would be ridiculous

Surely CGT wouldn't be retrospective would it?

It does seem like a minefield, working it all out, subtracting costs etc, working out gains and losses. At the end of the day it's just another vicious attack on the middle class.

https://www.oneroof.co.nz/news/35973?ref=nzhhome

“The other issue impacting the industry right now is the introduction of the Anti Money Laundering requirements. Agents are reporting considerable push back from consumers in regards to identity verification, which is leading to delays in properties being brought to market and properties being sold.”

Considerable push back – I can’t imagine why?

That article was a surprising balances look - coming from a Real Estate institute. I do think they are underestimated the impact of prices going backwards on ongoing demand ... once prices begin to fall, it WILL impact demand - as a huge amount of demand for housing is based on demand for tax free capital gains.

can someone please explain to me how we have 50 odd days to sell as house, when if you take total listings on trademe, and compare it with monthly sales data this equates to over 12 months worth of stock. Slight mismatch?
Real estate institute reports 48 days to sell
My calculations Trade me has say 37855 listings. Sales for January 4372. Which equates to minimum 264 days to sell. Caveat this doesn't include Barfoot/and others (who don't use Trademe, hence actual will be worse)
Why has no one pulled them up on this?
It is incredibly misleading

De-list + Re-list? From TradeMe:

Real Estate listings can be run for 21, 28, 42 or 56 days and Job listings for 30 days.

https://www.trademe.co.nz/help/318/listing-length-and-auto-extend

Also, its usually median days to sell, which distorts it to the shortside as the majority of the places that do sell (realistic price expectations) sell under 60days, most auction programs are 4weeks or less etc.. but those that don't are on there for months and months.

Whether some Vendors are aggressively selling, is a subset. Ditto for those vendors that decide to list for 30 days, then pull. At any one point in time there appears to be around 12 months of stock listed based on current sales trends.

Yes. The days to sell must then be derived from sell date minus current list date regardless of whether it’s the first or fifth listing attempt.

Perhaps the Black Power is a good organisation to do this kind of work

https://www.abc.net.au/news/2019-02-18/chinas-attempts-to-reclaim-money-...

Lets get back in the good books with China. Sign the treaty. Deport and assets in NZ return to NZ tax payer.

Yawn. This Govt is going to address the biggest cause of inequality in NZ and that's the Aussie banks sucking the life out of our economy via artificially inflated real estate assets. Targeted tax and minimum Bank capitalization grenades are about to drop in speculator land, all on top of the changes already made. I'm confident the Govt will keep increasing the pressure until they get what they want - an acceptable DTI ratio.

Uber eats delivered popcorn for the win!

One of the biggest sucker in our economy is that tall tower in Auckland!

Well, its certainly where you are likely to find the biggest suckers in our economy.

So does that make it a sucker sucker?

Sucker or laundry?