Sky-high bungalow price 'mad'

Agent Mike Proctor slapping the sold sign on the house that set a new high. Photo / John Stone

The sale of a modest bungalow in the Whangarei suburb of Regent for $230,000 above its capital value could be seen as the ripple effect from the explosion that is blowing Auckland house prices out of the water.

The house on a small section in Deveron St sold at auction last week for $615,000 but had a capital value of $385,000.

It's also a sign the current Government valuations - the CV (capital value or potential sales value that rates are assessed on) - are out of sync with the market, says a local property expert.

But a neighbour in Deveron St thinks it's more a sign that "the world's gone mad".

Real estate agent Mike Proctor, who had marketed the house, said a lot of people would be surprised at the auction result. "It sets a benchmark, absolutely," he said. "There's not been a house of this size in Whangarei, not even in the peak of 2007, that has sold for that much."

The three-bedroom house had been renovated but did not have an en suite bathroom or a large garage. It was of a popular heritage style, in a good location, but was not a landmark or luxury property. It was bought by a New Zealander returning from working in the Middle East.

But there was no strong evidence local prices were being inflated by cashed-up or investment buyers coming in from a higher priced market, Mr Proctor said.

"The next bid down was only $1000 less and that was from a local person, so it's not necessarily driven by an out-of-area idea of value. People are just looking to get into a good house in a good street."

The home has almost doubled in price since January 2005 when it sold for $315,000. Since then it also sold in 2008 for $392,000 and 2014 for $395,000.

LJ Hooker Whangarei chief executive Paul Beazley said the property "sold for an exceptional price. Whether that pays off in the future, the market will tell."

He said CVs tended to be low, distorting market value, and did not reflect the high demand and under-supply.

"CVs in Whangarei have no relevance to the market right now," he said.

"There is a strong buyer bench coming up from Auckland but most people in the market are still locals. It's a very attractive proposition, to borrow and buy on these low interest rates."

John Locke, Deveron St resident

Meanwhile, neighbour John Locke reckoned the purchase price was evidence the world had gone mad.

"When I knew they wanted half a million I thought they were dreaming ... but this price, I can't believe it!"

Mr Locke said he and other neighbours had watched the house being bought and sold over the years. He had a newspaper advertisement showing it for sale in 2004 for $279,000.