Housing boom: What you must pay

Lyheng Ke has been trying to buy a new home for the past year, without success. Photo / Doug Sherring

Homebuyers flummoxed by the heated property market have been given the best indication yet of what they should pay for a house.

New figures released to the Herald on Sunday show homes in Auckland are selling on average at more than 20 per cent above Capital Value ratings set by council.

Data from leading property information company PropertyIQ reveals 75 per cent of house sales in Auckland went for more than 15 per cent above CV. About 61 per cent sold for more than 20 per cent above CV and a fifth went for more than 40 per cent above CV.

Some of the most profitable sales have occurred outside traditionally wealthy inner city suburbs such as Epsom and Remuera.

In January, a modest house on the Albany Highway on the North Shore went for $755,000 - a staggering 109.7 per cent above its CV of $360,000. "The Auckland market has been increasing since the 2011 revaluations, so it is not surprising to see so many homes selling for above CV," said Jonno Ingerson, research director at PropertyIQ. "So far, just 8.2 per cent of sales have been for below CV."

Another North Shore home, a 1950s property in Exmouth Rd, Northcote, sold for $996,000 - 103.3 per cent above its $490,000 CV rating.

The four-bedroom bungalow was sold to a Chinese developer by Bayleys Takapuna agent Stephen Bidwell, on behalf of an elderly former owner.

"It is the first time it had been on the market for 50 years," Bidwell said.

"The house sold for so much because it is on a large section with the potential to be sub-divided."

Homes in previously less fashionable South Auckland suburbs such as Mangere Bridge and Takanini have also been selling for almost 60 per cent above CV.

Kerry Goodall, from Barfoot & Thompson in Manurewa, said new four-bedroom houses at the nearby Addison development have easily been fetching 20 per cent, or more, over CV.

"People moving from wealthier areas are happy to pay around $500,000 to secure a new house, even though the CV might be $420,000," he said. "They know if they went to an auction in Sandringham with the same money, they would get laughed out of the door."

Hayden Duncan, chief executive of Harcourts, said people moving to more affordable suburbs from expensive areas are often prepared to shell out more for a house than locals, simply because they have been used to paying more for properties.

But he cautioned against people using CV ratings as a baseline for deciding whether to pay an extra 20 per cent, or above.

"Many CVs are out of date and should not be relied on as a guide price," Duncan said. "It is better to look at what else has sold recently in the area."

Frustrated at search

Lyheng Ke has been trying to buy a new home for the past year, without success.
The married father-of-two says decent offers on four properties have been declined, because they were not for enough cash.

Yesterday, the bakery worker attended an open home and auction at a four-bedroom house with a CV rating of $380,000 in Mt Wellington.

He is now resigned to having to splash at least 20 per cent above CV to secure a dream home for his family.

"I suppose I would be prepared to pay that for the right house," Ke says.

"The way the market is going, it is very difficult to buy anything decent in a good area for anything less."