An original three-bedroom bungalow in Hamilton has sold under the hammer for a whopping $1.016m - a street record leaving even its selling agent speechless.
Hamilton real estate firms say the Hamilton market is red hot is due to increased interest from developers looking for larger sections to redevelop, investors wanting to land bank as well as owner occupiers looking to get a foot on the property ladder or upgrade.
Lodge Real Estate agent Blair Pointon said he had been shocked with the eye-watering sum the 1950s home on Young St fetched.
He had only expected it to sell for around $800,000 due to there being uncertainty over whether the 892sq m section was large enough to build two duplexes on.
But due to a bidding war it sold for $1.016m at auction last week - 120 per cent more than its $460,000 rateable value.
It has quadrupled in value since the property was last sold in 2007 for $250,000.
In February the median sale price for Hamilton was $750,000 up 17 per cent year-on-year and slightly lower than the national median of $760,000 up 22 per cent year-on-year, according to REINZ figures.
There were seven bidders at the auction, including some first-home buyers but after passing the $900,000 mark it came down to just three investors wanting to land bank.
"The attraction was - I think - that it was one of the original untouched blocks in Claudelands. It was an original 1950s Claudelands home with nothing done to the back section.
"A lot of people at the moment are land banking as well, so they are not actually developing the sites that they are buying, they are just buying it knowing that there is potential to do stuff with it down the track," he said.
"These questionable bit of lands are ones that developers aren't really touching because they are wanting something clear cut and easy whereas these bits of land where it's going to be easy - whereas these bits of land where it is going to be touch and go whether you can develop it or not seem to be going to more what I would call mum and dad investors wanting to land bank.
"I think if it was just owner-occupiers nobody would have paid over $800,000 for it."
Pointon said it was a seller's markets as stock was low and buyer demand was huge.
"There seems to be a lot of people with fear of pre-approvals running out as well especially from the investor side... so I think there are a lot of investors out there wanting to get something so they are not really caring what they are paying for it."
Lodge Real Estate managing director Jeremy O'Rourke said properties with larger sections that could offer redevelopment had in the past few weeks become really hot property.
"Generally right across Hamilton you are seeing significant redevelopment. Duplexes being put up and high-density living. I guess that compacts the city a little bit and makes use of a lot of the services that are sitting in and around some of these locations."
New figures released by Hamilton City Council shows almost as much new development happened in infill areas as it did in greenfields last year.
O'Rourke said there had been a lot of interest from both Auckland investors and home owners looking to relocate.
Harcourts Hamilton general manager Brian King said the market was hot with demand coming from everywhere - first-home buyers, mum-and-dad investors and developers.
The Claudelands property was not the only property fetching a surprising price and there were similar sales like that happening all the time, he said.
"As an auctioneer I'm calling properties every day with a million dollars in front of them. It's just the way it has gone."
However, King said it would surprise him that someone would pay over $1m for the Young St property if it couldn't be developed.
"The street is a very nice, established street but certainly it has to have something there to make it worth over a million dollars."
Both agencies were also seeing more than a 90 per cent success rate at auctions with multiple bidders for properties.