Buyers remain active but cautious at the Auckland apartment auctions and are also pulling their horns in when CBD car parks are offered for sale.
At Ray White City Apartments' auction on June 11 there were 11 apartments on offer, ranging from leasehold apartments and those requiring remediation work to more upmarket properties.
There was also a good turnout from potential buyers with eight of the apartments receiving multiple bids, one receiving a single bid and two receiving no bids.
However buyers remained very cautious on price and only four of the units sold under the hammer with the rest being passed in.
Ironically apartments with remediation issues are often some of the best sellers and there seems to be a well established market for them, with a core of buyers prepared to take a punt that they can purchase them at a cheap enough price to make a profit when the remediation work is completed.
Both of the units with remediation issues offered at the Ray White auction sold under the hammer, but the price discounts to their rating valuations were fierce.
One was a one bedroom unit in the Century on Anzac building on Anzac Ave, which had a rating valuation of $270,000. It sold for $175,000. The other was a one bedroom unit in the Harbour City tower on Gore Street, which had a rating valuation of $320,000 and sold for $185,000.
The other units to sell at the same auction were a one bedroom apartment in the Columbia on Nelson building on Nelson Street, which had a rating valuation of $530,000 and sold for $546,000, and a one bedroom unit in the Metropolis tower on Courthouse Lane. It had a rating valuation of $560,000 and sold for $462,000.
At the City Sales auction on June 10, a reasonably spacious, two bedroom unit with a car park in the Avoka building on Day Street, which also had remediation issues, sold for $96,000 compared to its rating valuation of $450,000.
At the same auction a two bedroom apartment in the Volt building on the corner of Queen Street and Mayoral Drive, which has been a mainstay with investors for several years, was passed in with a top bid of $330,000 compared to its rating valuation of $370,000.
Buyers are also being cautious of inner city car parks.
At the Ray White City Apartments auction on June 4, two car parks in the Farmers parking building on the corner of Hobson and Wyndham Streets were offered separately.
One received an opening bid of $50,000 plus GST, and when no further bids were received the auctioneer made a vendor bid of $65,000 plus GST. But when no further bids were received after that it was passed in.
The second received an opening bid of $40,000 inclusive of GST which was also followed by a vendor bid of $65,000, but it too was passed in with no further bids.
The other property offered at the same auction was a two bedroom/two bathroom apartment in the Urba building near the Karangahape Road end of Howe Street. It had a rating valuation of $720,000 and sold under the hammer after strong bidding for $626,000.
You can check out the details of all the properties offered at the auctions monitored by interest.co.nz on our Residential Auction Results page.
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24 Comments
Those are some pretty big discounts on the RV. Apartments seem to have been hit hard and fast by COVID.
VictimOfOCR. Excellent name!.
Hi VictimOfOCR,
Note that inner-city apartments have also "been hit hard and fast" by major weathertightness problems, structural problems, plumbing problems, noise problems, car parking problems, vandalism, dysfunctional body corporates - and exorbitant body corporate fees.
Unless you want an intractable headache, I'd give them a wide berth.......
Personally, I wouldn't take one as a gift.
I'd much prefer a single dwelling on freehold, fee simple title any day.
TTP
Perhaps true, but I think it is more likely a reflection of the economic environment than construction issues coincidentally arising since lockdown.
Compare February’s commentary to this ones. Quite a stark difference in buyer attitudes. https://www.interest.co.nz/property/103631/bidding-latest-auckland-apar…
100% clearance vs the handful that sold this week at close to half their RV.
Important to note that normally a lot of international students were renting apartments, air BNBs are apartments and that with everyone working from home the future of central city living is going to be alot different.
Apartments could crash by 50% even if the suburbs only drop 10-20%
Remember that there is a underlying housing shortage in Auckland as commonly repeated by the property market promoters.
1) So why are these apartments not selling like hot cakes?
2) Why are those that are selling, selling at prices below RV? Remember how property market promoters were telling us that when there is an underlying housing shortage that property prices rise? - this is now being shown to be incorrect?
3) how can there be an underlying shortage of housing and at the same time, property prices that are not rising?
I’m in the market for a first home. I got my pre-approval in early feb and have maintained it since, but with recent events I’m just watching to see what the market does. There is no family in the making or any other pressures driving me to buy sooner and the FOMO has evaporated.
A garden has always been part of my property ownership dreams but seeing 40% discounts on apartment RV’s is making me think about how important a garden is to me. I feel if I am having these thoughts, others will be as well, and some of those will decide a garden isn’t that important and go for these apartments. For this reason I think houses will eventually follow suit as more people settle for an apartment rather than a house.
Very true. I find it quite irritating when people talk about the isolation of certain geographical regions, property types or even streets as if it's possible to claim certain 'special' characteristics make these groups immune to market fluctuations.
Yes, absolutely there are differences between the demand-based value of types of property, and areas they're located in. But it is all connected. If, for example, values in Queenstown tumble, that will impact values in other areas: why would I buy a holiday home in, say Taupo, if I can get one very similar in QT for the same or less? If single family homes take a hit, that will impact apartments, because why would I live in an apartment if I can afford something with a yard (and vice versa, as above). Potentially this even extends between countries. If Sydney were to take enough of a hit, it would absolutely impact Auckland because of the hit on immigration.
These things aren't always huge or readily apparent, but when the fall is large enough (and it applies to rises too, hence the bubble growth in the regions that followed Auckland's) it will have an impact.
If you want to get into the apartment market be extremely careful and do a thorough investigation: who built it and what was his track record, what materials have been used, what is the maintenance history of the building etc. Get it inspected by at least two separate independent inspectors, ideally specialised in this type of building etc. And even this would not give you 100% assurance. Remember that Council inspections are virtually irrelevant, they are almost a joke, and that the general quality of housing in NZ is appalling. Be very careful, sometimes hiding behind an apparent great deal there is a lurking maintenance nightmare.
For now a garden and freedom to make a house my own still outweighs the savings of apartments, but data like this has certainly got me considering the idea.
Even if you pay an apartment off completely you still have to pay Body Corporate fees which can increase to a ridiculous level over time. Freehold home is always the best. Don't get into a trap you cannot get out of.
Please also consider the bodycorp fee.
I know some rather large corporates will be switching to distributed working now Covid is done. If you don't have to *be* in the city to *work* in the city, how will that impact house prices in the city, I wonder... Not to mention all the businesses, from coffee shops to corner stores, that rely on CBD foot traffic... Wild times a'comin', hang on tight.
Think about the impact on prices of car parks in Auckland CBD ...
I remember this one selling at what I thought was a ridiculous price a few years ago - $265,000 for a single car park was just nuts (sold in December 2017). Sign of the times I suppose, and potential speculation by the buyer.
If we take the higher opening bid of the car park of the Farmers parking building of $50,000 above as potential market value, then that is an 81% fall in price ... Would it have been better to have kept that $265,000 in the bank earning a "mere" 2% p.a.?
https://www.interest.co.nz/property/91396/265000-you-could-car-park-dow…
Here's a reminder of some thoughts at the time:
by CN | 14th Dec 17, 11:00am
That means the price has a 1.3% gross rental yield on this car park.
This is 2.9x the median household income in Auckland - a reasonable valuation ratio for a house for an entire household to live in. This is a somewhat ridiculous valuation for a single carpark where you can't even pitch a tent for 3 people to sleep in. The space is smaller than a living room.
Assuming a car park size of 2.4m x 4.8m = 11.52 sq m. Then using the $265,000 price, this is equivalent to a price of $93,091,832 per acre of land or $230,034,722 per hectare.
I, too remembered showing up at Shortland St auction room and car parks at Metrpolis sold for nearly 200K.
With the likes of Uber and car sharing schemes, they will have a major impact on the price of carparks.
Email from Barfoot that they have buyers looking to pay Premium after selling few houses in Auction (Do not worry about job loss or business loss as everything is fine and come what may housing market in NZ is immune to economy fall out or what is happening in the world) :
SOLD BY AUCTION
We also have many qualified buyers waiting to purchase in your suburb and surrounding areas at a premium price! If you are thinking of selling or moving soon, please call us for a FREE MARKET APPRAISAL
Looks like a crash to me based on those actual sales prices. How many more people with apartments are going to start playing the get out of jail free card before its to late ? I was really wrong on city apartments, I thought they would be GOLD in the future with everyone working in the CBD and the traffic only getting worse but all it took was a virus and suddenly many people can work from home
Crash (below 20%) doubtfull unless have second wave of virus but Fall definite - Wait till Election/Money gets over.
The way I read it there were only 3 non leakers, one went over CV and 2 went under. I don’t think you can read much into that especially as apartment CVs aren’t that reliable.
The leaking ones are always going to go well under.
Anyone know if the massive drops were on Ngati Whatua leasehold properties that have gigantic ground rents coming up?
It is v simple: apartment sales have fallen a lot in last 3 years but keep building more. cV19 means buyers mostly awol so excess supply. Guess what? Prices then fall. A lot
It's not that simple actually. Mike you always make statements as if they're fact. When mostly they're predictions.
There have not been a lot of cheap apartments to buy over the last 3 years. I know cause I've looked and they all sell for what I'd consider to be very healthy prices.
Oh and are you 100% sure foreign students won't be allowed in shortly?
Yes, of course it's a prediction. Based on laws of supply and demand.
Jacinda is not going to let foreign students in til after election because it would be electoral suicide if infections result.
Also, I am an estate agent.
There have not been a lot of cheap apartments for 3 years because buyer demand has been high.
Now it's not, and won't be for at least 6 months.
Do you really think the uSA and Japan and EU (65% of world GDP) can have worst recession in 100 years and NZ is not going to have a severe housing price drop?
We are not an exception. In 2008-09 NZ and Aus were lucky to be rescued by huge Chinese printing. Not this time
You get what you pay for, personally I wouldn't touch apartments that have underlying issues. When SHTF happens, most times it does, you get covered with it.
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