A brick and tile unit has sold for more than $1 million - a new benchmark, according to a realtor. The

Herald on Sunday

understands the two-bedroom 10m by 6.7m Epsom unit with a small deck and carport sold for more than $1m.

The property was due to be sold at auction but the vendor accepted a pre-auction offer, Barfoot & Thompson director Kiri Barfoot said. "The sale price is amazing," she said. "We're all a bit gobsmacked.

"Not many units go for over $1m. It sets a new benchmark."

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Barfoot believed the sale was a symptom of Auckland's heated property market

"There's nothing exciting about it. It has been done up on the inside with wide open-living and modern interiors and it's obviously a good location.

"But more than $1m for a unit is quite unusual. The vendors are very happy."

The Reserve Bank is set to announce on Thursday whether it will drop the official cash rate, a move some financial industry commentators say could lead to a fresh mortgage war.

BNZ economist Stephen Toplis said a further drop in interest rates in the short term would "fly in the face" of Reserve Bank advice on financial stability concerns.

If the OCR dropped below the current 2.25 per cent, a record low, Toplis warned against interest rate drops, saying: "The housing market is going nuts. The last thing it needs now is more stimulus."

He said household credit growth was accelerating and debt to income levels were breaking records.

"We think the best option for the RBNZ is to leave the cash rate where it is while maintaining its strong easing bias indicating the likelihood of at least one more rate cut later in the year."

$1.2million Epsom unit. Photo / Supplied
$1.2million Epsom unit. Photo / Supplied

Squirrel mortgage adviser Peter Norris said a drop in the OCR was more likely to happen in August.

"There is indication inflation is heading in the right direction so I don't think this will be the one that will drop," Norris said.

But it was unlikely banks would pass on any benefits of a decrease to customers. Banks, he said, were already operating on tight margins and would want to increase their profitability.

None of the banks spoken to by the Herald on Sunday would comment on whether interest rates would drop if there was a cut, citing commercial sensitivity.