"It is an old brick box to me that has just been made interesting," says Paul Gould of his $830,000 state house in Grey Lynn.

Mr Gould said the state-house tag was not a negative when he bought into the inner-city cafe belt last month.

"If somebody did not tell you that this started life as a state house, you would probably never pick it out. It is such a funky, groovy type of house now on a big block of land on a beautiful park setting.

"What I love is the privacy of the place. It borders a park on two sides."

Mr Gould, aged 40, single and a partner in an advertising agency, also reckoned the solid 1940s brick-and-tile home would not leak or rot away his substantial investment.

In August last year, the 85sq m house on a 580sq m section in Wellpark Ave sold for $302,500. Since then the original house has been converted into bedrooms and bathrooms and a new living space has been added at the back. For all that, it still looks like a state house from the street.

Meo Realty agent Tricia Lafferty, who sold the house, said it had had a lot spent on it, but nothing like the $527,500 price gain over 14 months.

Next door to the Gould house, another renovated ex-state house has attracted 110 people at the first two open days and is expected to sell in the $600,000 price range. Next door again, a plain ex-state house sold for $501,000 in the past month.

In sought-after Kohimarama, where the first Labour Government built state homes in an attractive location rather than tucked away from wealthy property owners, Tricia Lafferty is selling a three-bedroom ex- state house with "unlimited" potential to build on the existing character matai floors and possible sea views. Starting point: mid-$300,000s.

She said the interest in state houses had a lot to do with concerns about leaky apartments and terrace houses.

Ponsonby Real Estate agent Steven Glucina said it boiled down to the simple fact that the state house was "built like the brick proverbial".

"They never flowed well, but people see through that and put in French doors, polish the native timber floors and add a deck. Today, the state house is quite a funky thing."

No more so than in the inner city suburbs of Grey Lynn, Westmere and Pt Chevalier, where runaway demand for pockets of ex-state houses has triggered huge prices. In the past month a three-bedroom ex-state house on Richmond Rd sold for $420,000 to an investor. Ponsonby Real Estate is expecting $500,000 for a three-bedroom masonry refurbished state house at the beach end of Pt Chevalier.

Allan Lee has just paid $290,000 for a one-bedroom ex-state home in a block of five units in Westmere, $70,000 over valuation. At 50sq m, it's tiny.

"It does seem an awful amount of money for what I got," said the journalism tutor at the Auckland University of Technology.

But at least he can grow a few veges in his modest back garden.

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