Houses 'going like hot cakes'

Photo / Herald on Sunday

Soaring demand for affordable residential real estate is seeing frenzied bidding by first-home buyers packing auctions in Auckland suburbs.

Competition among buyers has increased as financing costs have fallen and the number of properties on the market has dropped.

Listings with Barfoot & Thompson, Auckland's largest real estate company, are at their lowest since December 2007.

A combination of factors this week has injected new urgency into bidding: Finance Minister Bill English is publicly mulling over increased taxes on property sales, interest rates are expected to rise, and an economics firm projected an 11 per cent jump in house prices in the coming year.

The auction of a renovated bungalow at 23 Brookfield Ave in Onehunga attracted around 80 people on Wednesday evening, with attendees spilling out and blocking the pavement.

Listing agent Dianne Nicholls said it was the type of property that appealed to young professional couples. "They're just going like hotcakes."

The high-demand $400,000 to $600,000 price bracket was experiencing an acute shortage of homes, she said.

Infometrics economist Gareth Kiernan said a shortage of new housing would put pressure on prices. He predicted a 24 per cent rise nationally over the next three years, and 26 per cent in Auckland.

With improved credit conditions and record low interest rates, the motivation for first-home buyers to jump into the market is compelling.

Latest figures confirm buyers have their confidence back - median time on the market has dropped from 58 days in July last year to 37 days in July this year.

Auckland first-home buyers favour inner-city apartments, as well as the mortgage belts in West Auckland, Westmere, Mt Roskill and Birkenhead, Harcourts chief Bryan Thomson said.

He believed the first-home buyer market is often misunderstood. "Everyone thinks it's the 'let's get started, three-bedroom bungalow' at the lower end of the market."

Thomson said while they still feature, many buyers were leaving buying their first home until later in life, so they have higher incomes to spend.

John Wills, sales head for Custom Residential, said one Grey Lynn "do-up" attracted five unconditional offers after the first weekend of open homes and sold for $640,000 - around $50,000 above the vendor's expectations.

"That's right in the sweet spot for that type of entry level. It was going to auction, but it didn't last past the first week."

He said the "acute" listings shortage has reached "crisis" levels from the buyers' points of view. "These buyers are tired, they're frustrated and they're over it - they just want a house and to get back to a normal life."

Peter Thompson of Barfoot and Thompson said the company holds around 50 auctions a week and sells 65 per cent under the hammer. Multi-bidders send sale prices well over reserves - one last week sold for more than $105,000 over the reserve.