Property Report: Tale of three houses in patchy city

By Bruce Morris

Bruce Morris spends a day in Auckland auction rooms for a snapshot on what’s happening out there

84 Burney Terrace. Photo / Supplied
84 Burney Terrace. Photo / Supplied

This is a tale of three houses across exclusive, middle and blue collar Auckland - opening eyes to the value of auction and the heat of parts of the market in the chill of autumn.

In the hum of Barfoot & Thompson's main city auction room in early May, 51 residential properties crammed the list - with an overflow upstairs carrying a couple of dozen more seeking to match-make buyer and seller.

Pulling three houses from that list and detailing the bidding doesn't add much to a general understanding about the state of the Auckland market, but it does give a fascinating insight into what can happen when two or more buyers come to tango.

They started dancing first at 123 Wheturangi Rd in blue-chip Epsom and in these interesting times, when quality listings are low, it seemed you'd probably need up towards a couple of million in your back pocket to have a chance, despite the rating CV of a mere $1.3 million.

So where did it end up for this substantial (250sq m), beautifully refurbished 1930s four-bedroom home (with office), two bathrooms and designer kitchen on a 738sq m section? Well, the CV was swamped with the opening bid of $1.5 million and the price charged on through the reserve of $1.85 million before the hammer fell at $2.3 million.

In other words, $450,000 (or 24 per cent) above the price the owners would have been prepared to accept.

It's fascinating to trawl back through previous sales of any property (available on and on this one we learn it last sold in March 2004 (as the boom was starting to gather pace) for $1.36 million. So the auction was an endorsement of investing in quality in a classy suburb, remembering that real estate can harm personal wealth as well as buoy it. It's all to do with timing and holding for a decent period to iron out the dips.

Fourteen kilometres down the Southern Motorway from Wheturangi Rd to 18 Landon Ave, Mangere East, the owners had slightly lower expectations. About $2 million lower, in fact, for their two-bedroom brick and tile bungalow on 890sq m of land, carrying a 2011 CV of $305,000.

Until now, Mangere East hasn't figured among the Auckland suburbs which have strongly recovered since the market highs of five years ago, and one swallow doesn't make a summer, let alone an autumn. But the owners in Landon Ave weren't overly optimistic, setting their reserve at $295,000.

Reserves are hidden from bidders, of course, but the "now selling" lights flash when the target is reached and the price marched to $330,000 - $35,000, or 12 per cent, higher than the owners would have let the property go for.

Two lots later in the afternoon auction session, it was time for middle Auckland to have its moment in the sun.

The elevated 188sq m four-bedroom home at 33 Stephen Lysnar Pl, Hillsborough, with conservatory, modern kitchen, decks, double internal garage and wide views from the 898sq m section, carried a CV of $590,000.

But at times CVs can have little connection with reality and the owners decided on a reserve of $520,000 as a price they could live with. As it happens, they've now got rather more to live with: the property sold for $602,000 ($82,000, or 16 per cent, above the reserve expectation) as two couples nodded backwards and forwards with $1000 and $500 bids.

Of the 51 properties at the auction - covering homes on the southern side of the bridge, from St Heliers, Remuera and Parnell to One Tree Hill, Onehunga, Hillsborough, Epsom, Mt Eden and Mt Albert - 25 sold on the day.

Unlike the other auctions I've sat through for Property Report over the past year or so - bidding was strong on most successful lots. Previously, Barfoot's staff have often had to work overtime to coax up buyers and bring down reserves when bidding has stalled. This time, the bulk of sales passed the pre-auction reserves and, when they didn't, the gap seemed easier to close.

In a small number of the lots, there appeared to be an element in the bidding of "we just have to go higher or we'll miss out". It wasn't the sort of panic bidding that was obvious at times in the boom, but one or two buyers may have left the auction room just a little anxious that they went beyond the price level they intended. The power of the auction.

As 84 Burnley Tce, Mt Eden, raced past its $1.32 million reserve and then slowed, auctioneer Marian Tolich tried to rekindle further interest from an early bidder.

"I think he's running out of money," she told the young woman, referring to the leading bidder's last $2000 raise.

The young woman was not further tempted and her reply was quick: "So are we!"

But Tolich's pleasant banter was just as swift: "You told me that $50,000 ago!"

The home, a lovely three-bedroom renovated villa, eventually sold for $1.355 million - $395,000 above CV and $35,000 beyond the owners' bottom line.

If some buyers were anxious at paying a little more than they intended, some of those who missed out left with the look of despair after bidding their best and being left well behind. You could read their faces: will we ever get the house we want? And their mood would not have been helped by the $1000 or so most of them probably spent on specialist reports - precious cash outlaid for no return.

It's not entirely a lack of properties for sale that is causing would-be buyers to lose heart. Rather, the problem seems to be the right sort of properties.

But perhaps some of those who missed out need to alter their sights to more modest properties in more modest suburbs. After all, 26 homes did not sell that day, and 14 of them passed in without a bid. Outside one or two "Mediterranean-style" houses that may have been tarred with the broad brush of the leaky home scandal, what was wrong with them?

At the end of the day-long auction, with more of the houses certain to sell over the following week or so, the general feeling remained that, despite some standout prices, buyers are still discerning as the economy searches for growth and listings stay low.

That makes for an Auckland market which is producing encouraging across-city statistics and some staggering price rises in the central suburbs, but remains a little patchy.

You don't need such a big cheque book to get a decent family home on the fringes of Auckland. A mortgagee auction the same day gave an excited couple just what they were looking for: a newish three-bedroom property, fenced with decks and garden, a separate double garage, a decent rural view of rolling hills and carrying a CV of $275,000.

They got it for $270,000, and the young couple couldn't have been happier. And not a bad day to celebrate buying a house either - revealing to the auctioneer; "It's our wedding anniversary!"

- NZ Herald

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