– Auckland real estate agency closing more than $2m a day in sales over winter.
– Investors are targeting multi-unit properties for high yields, seeking returns between 8% and 12%.
– Developers are discounting due to surplus stock, with bulk buyers saving significantly on purchases.
An Auckland real estate agency is raking in more than $2 million a day on the back of a house-buying spree by cashed-up investors.
Mount Albert Harcourts owner David Findlay told OneRoof that his office had done “huge numbers” over winter, more than double what it recorded at the start of the year.
He highlighted sales of more than $60m in both June and July, and indicated August’s tally was on a similar trajectory.
Findlay said the surge in sales was driven by the return of professional investors to the market.
They were snapping up multiple properties at once, including new townhouses, blocks of older flats, or established boarding houses.
One agent in his office, Manoj Hooda, had sold three multi-units in South Auckland for close to $7m in total. He said the buyers, all investors, had pounced on the properties, often making offers within days of the listings going live.
Experienced investors are returning to the market looking for high-yield properties. Photo / Getty Images
Mount Albert Harcourts owner David Findlay says his office has done “huge numbers” over winter. Photo / Supplied
His colleagues Josh Lowe and Bryce Taylor recently sold two rental properties in Sandringham and Mount Eden to investors for more than $3m.
Findlay said multi-unit properties were attracting the attention of experienced investors, who, unlike most newbie investors, were looking for strong rental income and high yields, not capital growth.
He said these buyers were looking for returns of between 8% and 12% on their investments. Sharp prices had lured them back into the market.
“There is stock that’s been sitting there for a while, and people are getting discounts. They buy six or eight houses in one block and get a 10 to 15% discount on price,” he said.
“Boarding houses have such a great yield right now. When we get one, it sells out within a month.”
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Barfoot & Thompson Mount Albert branch manager Matt Thompson said a surplus of new townhouses in the area meant developers were prepared to offer discounts, particularly to buyers snapping up more than one house.
“There’s pressure on the developers because they’re selling many homes, not just one. They are acutely aware there’s more supply than demand, and if they don’t meet the market 1755978192, the traditional spring rush will exacerbate the problem.”
That means that developers who have realistic pricing and differentiated products – offering two car parks, instead of one, for example – are moving their stock. However, Thompson is wary of using the “d” word.
“The price is where the vendor is willing to meet the seller. It doesn’t mean that if the vendor was hoping to achieve $1m and the property sells for $950,000, the vendor has discounted. It just means the market price is $50,000 below the vendor’s price. Our job is to make sure they’re making an informed decision, based on their understanding of market conditions. They’re not being bullied into it.”
A house on Balmoral Road, in Auckland’s Mount Eden, which had been reconfigured as three self-contained flats, recently sold to an investor for $1.79m. Photo / Supplied
Another rental, on Taumata Road, in Auckland’s Sandringham, was snapped up earlier this year for $1.63m. Photo / Supplied
Wallace Real Estate business co-owner Luke Nutting is happy to use the “d” word and is clear that his office’s winter boom is the result of discounting in the market.
“Developers are sitting on a lot of residual stock; they have just got to move on, so are pricing accordingly. We’re seeing stuff that was selling in the $800,000s now going for the $600,000s,” he told OneRoof.
“There was a big flurry, starting in May, working through that residual glut. Some of it had been around for a couple of years, those big developments with hundreds of homes.”
Nutting said bulk investors were buying 10 or more properties at once, saving up to $1m on the total price. He noted that these buyers were not looking at yield, but were counting on future market rises giving them capital gain. “If something was $900,000 and you bought it for $700,000, you just sit tight for a few years.”
Ray White agent Banson Chong recently got $3.3m at auction for a block of nine rental units in Auckland’s Avondale. Photo / Supplied
Harcourts’ Hooda told OneRoof that demand for multi-unit properties was high and that properties were being snapped up before they officially hit the market.
An eight-unit block with a two-bedroom house in Avenue Road, Otahuhu, went for $1.83m in an off-market deal, $1.1m more than the owner had paid 20 years ago. Another 10-bedroom boarding house in Hill Crescent, Papakura, went for $1.6m after just eight days on the market, while a block of nine two-bedroom flats on Atkinson Avenue, in Otahuhu, had offers within five days (it is still on the market).
“I’ve got 40 to 50 high-value investors actively looking to buy these multi-properties with the capacity to buy. There’s a real shortage. I have a buyer who wants to give me an offer straight away on listings I haven’t signed on yet,” he said.
Units in Auckland’s central suburbs, including Sandringham and Mount Albert, were highly prized because they offered yields of up to 8%.
“These are such good cash flows for their owners that they hardly come onto the market. It doesn’t matter what the CV is, it’s how much rental yield you are getting. That’s how the price gets decided.”
The agent added that buyers knew their math, and if the yield was less than 6%, they were not interested. He said that there were some buyers, mainly flippers, looking for boarding houses to upgrade and on-sell at a higher price to longer-term investors.
Ray White Remuera agent Banson Chong said that some of his developers were targeting individual buyers with special deals for their finished townhouse blocks. He said a newly released project of 29 units saw three sales and three contracts with either first-home buyers or one-off investors within three weeks of hitting the market.
“That number of sales would not have happened a year ago. One week we received six offers on two and three-bedroom townhouses. They were selling like hot-cakes,” Chong said.
But instead of discounting, Chong said his clients preferred to offer a cash rebate or a subsidy. That amounts to $20,000 or $30,000 off a $600,000 to $800,000 property. In addition, sometimes a developer will discount the price on less desirable houses, say those in the middle rather than the corner lots, he said.
Ray White Commercial director Finn Hurst said buyers, particularly in the city-fringe suburbs like Mount Roskill, Mount Albert and lower North Shore, were “racing around trying to pick up properties”.
“There is more urgency because they get the sense the market is starting to lift. They would like to be picking things up at a 20% discount, but not too many developers need to discount that much, as that’s all their margin gone.
“But many are willing to sell at 10% discount. The developers just need to get their cash out and start recycling capital,” Hurst said, adding that he was now seeing an uptick in land sales, particularly larger plots that can take 20 or more units.
“Prices aren’t lifting yet, but there’s good competition. Most campaigns result in five or more offers, or deadline sales or auctions being brought forward. I think price is stabilising, I don’t think it’s going to go down too much more.”