It was another packed auction room at this week's auction of Auckland CBD apartments by Ray White City Apartments.
The number of Chinese investors buying Auckland residential properties has been very much in the news over the last few days and there was also a good turnout from the Chinese community at this week's auction, where at a rough count they probably made up around two thirds of those attending.
However that is not new.
Auckland's CBD apartment market has always been dominated by investors and Chinese investors have always been well represented among them.
There were only three apartments offered for sale at this week's auction and bidding on all three was ferocious, both from Chinese and other potential buyers.
By the end of the auction Chinese buyers had purchased two of the apartments and the third and largest of them had been purchased by a pakeha woman and her demeanor suggested she intended to live in herself.
The other two were probably purchased as investments but it was significant that the Chinese buyers who purchased them - and most of the underbidders who competed against them - were in the room.
Although there were some telephone bidders, most of the auction was from the auction room floor.
So although there was plenty of action from Chinese buyers, who competed fiercely for the properties, in the main they were here on the ground, not bidding remotely from overseas.
The other notable feature of the auction was that according to QV.co.nz, two of the apartments that went under the hammer had only been purchased within the last three months and both were resold this week for substantially higher prices.
The first lot on offer was an apartment in the Aura building, which according to QV.co.nz had been purchased for $300,000 in April and was resold at this week's auction for $391,000,.
The second was an apartment in the Marina Park complex, which according to QV.co.nz had been purchased for $329,600 in April last year. It was resold at this week's auction for $507,000, meaning its price had increased by $177,400 (54%) in 14 months.
However the Marina Park building has only recently had recladding work completed to address previous weather tightness issues and the completion of the work would be likely to have lifted the value of the property.
The third apartment on offer, in the Silo building off Emily Place, had been purchased for $333,000 in May and resold at this week's auction for $377,900.
The full results are listed below:
- 504/53 Cook St. Aura building. A 49 square metre, two bedroom apartment with harbour views. Vacant. Sold for $391,000. Rates were $1023 and the body corporate levy $4317. According to to QV.co.nz the property had been purchased in April this year for $300,000. Prior to that it sold for $279,000 in 2008. The agents were Mitch Agnew and Krister Samuel.
- 37/146 Fanshawe St. Marina Park building. A 60 square metre, one bedroom/one bathroom unit with a second toilet and and a car park. Vacant. Sold for $507,000. Rates were $1228 and the body corporate levy was $3523. According to QV.co.nz the apartment had been purchased in May last year for $329,600 and prior to that had been purchased for $210,000 in 2002.
- 3B/23 Emily Place. Silo building. A one bedroom apartment with a car park. Vacant. Sold for $377,900. According to QV.co.nz the apartment had been purchased in May this year for $333,000 and prior to that had been purchased in January 2014 for $285,000.
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44 Comments
SSSSSSSSSSSHHHHHHHHHHHHH!!!!!!!!!, you're not allowed to mention the Chinese are involved, I did once but I think I got away with it...........
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All those overwhelming numbers of British, American, Australian and returning expat buyers topping the official stats must have been bidding from behind curtains or one way mirrors, or maybe they just use asian looking proxies?
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Que Tui moment........
They could have saved/earned an extra $5 or 6b in ChCh if they used a little common sense and let the private insurers pay their full settlements rather than giving them easy options to walk away via the red zone buyout, CBD blueprint and EQC bungling.
How much did asset sales raise??
Key and Brownlee combined are an economic and financial shambles...
Listen to the Chatter - Especially for you Kate
Herewith, Gareth Morgan gets the first leg of his Big Kahuna trifecta - without the tax part
An 84-year-old woman, who has lived in her 1914 villa at Grange Rd Mt Eden for 48 years, raising 11 children plus five foster children, is facing a rates bill of $14,543 this year, up 48 per cent on last year, and 62 per cent more than three years ago.
There goes her pension in a wealth-transfer money-go-round from Central Government to her to Auckland City Council
Logically she may need to consider cashing in and down-sizing and moving away from her family to a regional centre with hospital availability and medical services
http://www.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=114…
She will not be alone in this
We have to also look at this issue of rising rates on the 'cash poor - asset rich' from the point of view of the elderly person who really wants to live and die in the only place they have ever called home.
Many of us have been extremely mobile in our lives to date - but many of our parents weren't. They bought the house when they first married, had the whole family there and then also stayed on in their retirement. They don't want to move - no matter how much warmer or easy care another place (they might be able to afford - many of these elderly don't live in high value houses or areas - and can't do a downsize anyway) might be.
Hence the reason why councils brought in the rates postponement schemes. Very often I find its the kids of these elderly that moan more than their parent(s) - who don't think their parent(s) should have to put the rates bill 'on the house', so to speak. I think we can all discern why.
Yes, and as Len explains - rates postponement is an option for those elderly on fixed incomes faced with unaffordable rates. Elderly being the operative word - as the option is only available to those 65+, I believe. No help whatsoever for everyone else out there without the ability to 'magic up' another 3-4 grand from their employer.
This is gentrification for you. Not a new trend at all.
But there is a flip-side to this. Our kids are trying to buy a first home in the Wellington area. The one they have an offer on at the moment is within both a safe and easy walking distance to their children's primary school. The house is so 'original' that they'll need to replace scrim and Gib most of the walls. The vendor inherited it from her parents and is living in it as well - and now she is 65+ too. The house has been on and off the market for more than 18 months - I assume because the vendors price expectations are somewhat closely related to her RV. But therein lie the problem with our system of rateable valuation - they only go up, rarely down because land value is part of the equation. To my mind, the house on that section actually devalues the land, but that isn't the way QVs re-valuation of RVs works. Yet it really, really should - otherwise rental investors keep buying the old stock and doing nothing to it because they know its valuation won't go down. They need to be incentivized via the valuations system to keep up with maintenance and improve the stock (or simply just not invest in these properties because of the certainty of the capital value that they will lose).
And then the other problem is, where will the vendor move to - even if she gets near or at the RV for the property? An even bigger problem. A lot of people who have owned their properties in these prime locations for young families (near schools, on the flat, off main arterial routes etc.) since raising their own children there .. just can't buy down to anything suitable for them in their latter years.
Lots and lots of problems for sure. Not only do we need to build/refurbish more state houses - we need to find a way to build 'granny flats' a whole lot cheaper too.
Spot on re valuations Kate.
It's like limiting the supply of cars and having no WOF regulations, so even old rust buckets become valuable.
And the ability to speculate increases demand, creates mini monopolies, and therefore increases prices to create a 'profit' margin for doing nothing but rentiering.
Just like the ticket scalpers, just stand in the way (in the middle) and people have to pay just to get pass
Thanks Dale, your confirmation means a lot. I've been banging on about the way QV conducts its valuation business for years. I'd be most happy if rates were based not on a dollar value but rather on a number derived based on proximity to services, whether your street has footpaths or not, whether you live on a main thoroughfare or not (making the leafy suburban streets higher in number assigned), contour of land, flexibility of land use and any number of other factors ... anything but the dollar value of a home and the land it sits on.
But if we must stay with dollars - then let's use that valuation system as a means to improve the housing stock - i.e., disincentivise speculation without improvement.
Probably an irrelevant comment but old "clanger" cars can become valuable, even common makes! It all depends on supply and demand.
Good 1980s e30 BMWs can sell for $15,000 when they were $5,000 ten years ago.
Ferrari 308s have soared in value recently. 70s/early 80s Porsche 911s have gone up dramatically too.
Even 70s Fords and Holdens in good order are now getting expensive. Some interesting Japanese makes are too.
Antiques and collectables can do the same.
So the moral is to spend your money in assets that increase in desirability not the reverse.
Because when money's tight across the country it hits a lot of people.
Hard for many NZers to sing the happy song when their gilded cage is dirty and worn, and times are tough.
That's why I used to address origin of money, creation of value, added value, what can be done to increase buying power of the populace to create a prosperity. If the spenders have cash, everyone does better...as long as the suppliers are fully remunerated...which they weren't which is why things are rapidly sliding to a stop.
who pays for the renovations introducing new stock? Are tenants in you area so rich they can afford to rebuild a house every 20-30 years? Most mid age folk who get over median wage (a lot of the wealth portion of NZ) struggle to pay off 1 house in a life time, let alone doing complete brownfield rebuilds, tenants and those under median wage would have no chance (and thus how do landlords charge rent? no one could afford it!)
A lot of retirement villages do well, with small townhouses. They also work well for visits by staff to make sure the retired person hasn't had an accident if they're alone. Not elderly homes or such, not even the villas with nursing on hand. Some masonic retirement villages have this kind of service, they're great for people who are alone or the section has become too much maintenance (no extended families to do the family household maintenance any more).
A major reason landlords don't upgrade places like that is you pour the money in, and in, and in...where do you stop? And at the end of it, you've still got an old house...sure a character house often. But when the landlord resells , it will go at market price, as valuations, especially RV, don't recognise improvements or chattels. It's construction type, age, configuration (3bd, 1bt, 1 g) based on whats around it - that sets your market; not how good it is.
We're not talking new stock - we're talking existing houses. As I said;
They [landlords] need to be incentivized via the valuations system to keep up with maintenance and improve the [existing] stock (or simply just not invest in these properties because of the certainty of the capital value that they will lose).
Meaning, investment in residential housing would likely decrease if valuations were decreasing at the same rate as the houses were deteriorating. The only reason valuations do not follow this decreasing trend presently is due to land price always going up to counter any age-related devaluation of the dwelling. If a poorly maintained or not updated house then comes on the market, first home buyers (who want to live in the house themselves) don't need to compete with rental investors to the same degree (as rental investors realise the capital value will decrease - unless they spend more capital, and of course a rental has to remain vacant to be fully/properly renovated).
You can get RV re-valuations done by QV based on improvements - chattels improvements as well. That's why you see so many re-valuations midway through the 3 year valuation period. Folks have renovated and pay QV to come in and re-value the existing rateable value. See here;
Urgent update to Rating Value
With an urgent update to Rating Value you can get your RV assessed outside of the objection period for your area. This can be beneficial when you have made changes to the property to add value and you are ready to sell.
To order an urgent update to Rating Value simply search for your address and click Buy under the Property Details tab. You can then submit the order form.
https://www.qv.co.nz/valuations/rating-valuation
Some (most) of the re-valuations I have seen done are extremely generous - when I ask the vendor what work was done to get that re-valuation. Most council records will tell you whether a property has had its RV re-valued mid-stream. It's another part of the QV methodology that serves to inflate house values unnecessarily.
And she probably has memories to go with it. You could build you 100 quality apartments on the edge of town and a modern shopping mall, and get away from all the old-style legacy issues. Which hopefully Christchurch will do. and not bother someone who loves their family home.
We could also destroy all your memorabilia and cherished possessions and give them to upcoming students wanting your career - that would make students momentarily happy.
At what point does an individual person or their life have value to you?
Realistically assuming a low rise medium density development 3000m2 would provide no more than 20 modest size units (150m2/unit or 67households/ha). Only high rise tower blocks could achieve 100 units or 333hh/ha.
Given none of those developments would be permitted in Grange Rd, I am going to assume 5 or 6 units would be the maximum. Certainly nothing like 100.
Feel free to pay my rates bill if you like.
(I have avoided ever adding them all together for fear they exceed 6 figures (unfortunately I know they do and am just in denial)).
The classic one is where we have a block of four flats and the whole rent from one of the flats is needed to cover just the rates.
Although by reports you would be forgiven for perceiving otherwise, the percentage of the worlds population who may have an interest in obtaining property or even just living in Auckland is likely quite low. We all may observe and pass comment but most only out of wonderment at the spectacle of those falling over themselves in such a greater foolish fashion. Of all the cliches, dunno who said it, but my favorite: " ..In the rat race, even if you win, you are still a rat."
By losers he referring to all the people who haven't gone broke yet that have enough in the musical chairs game to try again.
The location issue of income/wealth related people (gentrification) is example of this in progress. the stakes get higher, and its rat eat rat out there. the less one does and the more value one can strip out of it, the better up the scale you go. Losers are anyone behind you, Winners are those left currently in front of you in the climb.
As long as the game is played everyone loses, because once it's over all the losers kill the last winner and their family and start again.
"However the Marina Park building has only recently had recladding work completed to address previous weather tightness issues and the completion of the work would be likely to have lifted the value of the property."
Fair enough. But who paid for that reno work?! The owner before he sold would be my guess. So deduct whatever it cost from the 'flick on' price.
Meanwhile, Neil Finn's home in Parnell with CV of 5.1 mil with asking price 3.75 mil.. so not all roses
http://www.trademe.co.nz/property/residential-property-for-sale/auction…
"The other two were probably purchased as investments but it was significant that the Chinese buyers who purchased them - and most of the underbidders who competed against them - were in the room."
They might have been in the room but the questions not asked were whose money they were using and whose name went on the title. Particularly relevant when the buyer is a spotty 20 something student or a local poor Chinese immigrant.
See the example below from Oz. "The true owner of a multi-million dollar Sydney property has been revealed as Chinese businessman Wang Zhijun, who reportedly used an elderly Melbourne couple to hide his identity in order to avoid foreign investment laws"
http://www.dailymail.co.uk/news/article-3109459/Mystery-owner-spectacul…
3b/23 Emily had plenty of ownership changes - here's the dates and the names of the prior owners - it's all public record information easily found online:
Sale Date Type Sale Price
06 May 2015 Multi $333,000
22 Jan 2014 Multi $285,000
09 Jan 2013 Multi $247,500
16 Jul 2008 Multi $200,000
29 May 2002 Multi $155,000
249990 J Bodle 101 Limited
Prior 249990 Huang, Chunping
Prior 249990 Jung, Seung Jae
Prior 249990 Kim, Ara
Prior 249990 Kim, Jin Woo
Prior 249990 Kim, Sung Bong
please explain how IRD going to make them pay, once the property is sold and the money transferred offshore poking your finger and saying tut tut is not going to work.
our requirements have been too loose for far too long.
at least from October 1 they will have to pay upfront then try to claim it back.
in saying that though I suspect there will be a lot of proxy buying to get around the rules same as what is happening in Australia.
A company called Zhuoda Group has developed a very unique form of 3D printing buildings, so unique that not only have they applied for over 22 patents for the technology, but they also are reluctant to divulge the exact process. Unlike other forms of 3D printing of large structures, which use a cement base for construction, Zhuoda does not. In fact, the material that they use is being called a “secret”, although they have many parties interested in purchasing it.
The buildings that they are fabricating are strong enough to withstand 9.0 magnitude earthquakes, stand up to harsh weather, and provide for superior insulation. Better yet, the material that these houses are constructed with also generates negative ions on a permanent basis, a feature that many Chinese will be quite happy with. On top this, the buildings are also fireproof, waterproof, and virtually corrosion-proof.
http://3dprint.com/82322/chinese-3d-modular-homes/
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