I'll watch the auction with interest and report to Hawke's Bay Today readers. With the new kitchen and real estate agents fees, the seller will need to get well into $600,000 to show a profit.
Clearly that is his expectation.
A couple of weeks ago the New Zealand Herald included a major article about Auckland property which featured interviews with some big players in the real estate industry.
All of these gentlemen were in agreement that the burgeoning Auckland house prices are sustainable, and values could and probably would rise further.
It struck me that whenever everyone agrees that some rapid expansion in values is not a bubble, which is effectively what the interviewees said, then it is a bubble and the bubble is about to pop.
Though that statement may sound thoroughly counter-intuitive, it has a good historical pedigree.
I well remember a dairy industry commentator describing the $8 plus per kilo price for milk solids as a "new normal". This was in February 2014 but by May the following year that price had nearly halved.
If you own already own Auckland property, as I do, you get a pleasant but artificial sense of wellbeing and wealth, but much of what is going on in this market is likely to do long term damage and not just in Auckland.
Levels of home ownership are the lowest they have been for60 years meaning that a growing proportion of families have become tenants.
This trend is particularly marked amongst the Maori and Pacific Island communities.
In some of the previously "affordable suburbs" of Auckland, up to 80 per cent of house sales are going to investors.
We are heading for a society where a substantial proportion of families will always be tenants.
In simple terms we are expanding a class in society who will never pay off a mortgage and live rent-free. They will always shell out a big chunk if their income, wherever it comes from, to a landlord.
This future is undesirable and avoidable.
It is likely to impact places like Hawke's Bay as "investors" borrow against the bloated value of their Auckland properties to acquire rental houses in the regions.
Families who rent their accommodation are much more likely to move regularly, and this has a malign effect on education, health and a whole range of outcomes.
I remember a dinner with Helen Clark, before she became Prime Minister, and a well-known social activist. Helen was concerned that her incoming government would not be flush for cash given the tax-cutting policies of the soon to be defeated National Party administration and wanted to know where the best "bang for buck" in terms of alleviating poverty was to be found.
There was no doubt in the mind of this particular advocate. He strongly urged the return of income-related rents in state houses to stabilise accommodation for the most vulnerable.
The churn created by families moving frequently from one private tenancy to another made holding down jobs difficult, disrupted schooling and is associated with poor health outcomes.
Income-related rents in state houses became a feature of the Labour Party's policy platform for the 1999 General Election. The obvious success of this strategy has meant that National has left it in place, but state house building has not kept up with demand under National, pushing many more families into much less secure private tenancies.
There are longer term consequences of the drift away from home ownership and into widespread renting.
Our current superannuation system is based on the belief that a large majority of people will own a home and have paid off any mortgage by the time they retire.
If current trends in home ownership carry on, a significant proportion of retirees will be renters and presumably require the rent subsidies which are already costing the government more than $2 billion.
The two-bedroom unit back on the market at $600,000 or more is unaffordable for those on low or modest incomes and this gap in the market can only be filled by a large state backed-house building programme.
Such programmes have a proud historic pedigree.
Why are we waiting?
Mike Williams grew up in Hawke's Bay. He is CEO of the NZ Howard League and a former Labour Party president. All opinions are his and not those of Hawke's Bay Today.
