Worlds collide in extreme sales

Not quite a one-horse town, Murupara has some of the most affordable housing in the country. Photo / Rotorua Daily Post

In Auckland, you'll need $40,000 or so as a deposit to scrape into some suburbs at entry level. In Murupara, the same cheque will buy you the whole house.

The run-down timber town in the central North Island - less than an hour's drive southeast of Rotorua - tends to be in the news more for its darker side than real estate speculators.

Sure, it has a tough side and is down on its luck a little. But as anyone in the town will tell you, Murupara has a decent community spirit and is not a bad place to live.

The attractions are as they have always been - great fishing, hunting and tramping. But these days you can add another dimension to the appeal of Murupara: the price of houses and low rents.

In the last quarter of 2009, the town featured three times in the "bottom 10" list of lowest prices achieved for North Island sales.

And according to L. J. Hooker's Malcolm Forsyth, of Rotorua, it may even have done better (or is that worse?), because the lowest sale of all, in October, doesn't seem to have filtered through in the statistics. Our list zeroes in on Murupara sales at $45,000, $56,000 and $63,000, but Forsyth says his office handled a $25,000 deal in the period.

These days the population is 50 per cent down on the 3000-plus highs of a generation or two ago and it's tough getting a sale.

However, weekly rents for a three-bedroom home sit around the $100 mark, giving an average rental yield of about 10 per cent - the sort of return big-city investors dream about.

Forsyth says Murupara has been given "a bad rap" over the years, but "it's not a bad little place", with a good range of shops and community services and an outdoors playground on its doorstep. The $50,000 average price there will get you a three- or four-bedroom weatherboard home of 1950s and 60s style, built of solid native timber, probably with a garage, sitting on 700-900sq m.

The other end of the market gives some interesting pointers on the enduring value of location.

The list, featuring the highest sales by value in the quarter, has Wellington's Oriental Parade in number one position, but seven of the top 10 are in Auckland, four of them east of Queen St.

A dip back into the sales history of the Bassett Rd property helps to reinforce the case that, over time, residential real estate in top locations will bring rich rewards. It sold in February 1981 for $72,500 and in September 1996 for $535,000. At its 2009 sale price of $3.485m, that's a six-or seven-fold increase in 13 years, a juicy capital gain even if big money has been spent in the meantime.

As in life, though, timing is everything - illustrated by a trip over the harbour bridge to Milford's Lake View Rd.

This home sold last quarter for $3.14m (against a CV of $3.55m), to sit in the middle spot on the top-10 list, but there was no capital gain here. In October 2007, the owners bought it for $3.795m, so, after real estate and legal fees, they probably suffered a loss of around $700,000 over the two years.

Much happier would have been the people who bought the place in August 2004 for $2.85m (pocketing around $900,000 in capital gain in a little over three years) or, even further back, the 1999 buyers who got it at a snip - just $1.26m.