Humble home sells its CV twice in the booming Auckland market

A humble 1970s house in Auckland grossed its owners nearly $ 2 million in profits in just a decade of ownership, underscoring how prices skyrocketed before the council’s new valuations were released.

The North Shore home on Sequoia Pl in Sunnynook sold for $ 2.4 million at auction earlier this month.

Not only is this nearly $ 2 million higher than its 2010 purchase price of $ 430,000, it is also $ 1.4 million higher than its 2017 assessment by the Auckland Council.

The owners of this Sunnynook, Auckland home bought it for $ 430,000 in 2010 and recently sold it for $ 2.4 million.  Photo / Supplied
The owners of this Sunnynook, Auckland home bought it for $ 430,000 in 2010 and recently sold it for $ 2.4 million. Photo / Supplied

The board said earlier that it will release its new resumes next month, but has yet to officially confirm it.

Owen Vaughan, editor of the NZME-owned real estate website OneRoof, said house prices in Auckland continued to hit record highs in the meantime.

“Auckland’s real estate market over the past three months, despite the foreclosure, has grown significantly, with the city’s average property values ​​now well above $ 1.5 million,” he said.

“This house, like many others that have been sold over the past year and a half, has made tremendous gains.”

The tremendous pace of price growth has led prices to leap well above the latest Auckland Council assessments made in 2017.

Homes selling for hundreds of thousands of dollars – even millions – above their CVs have become commonplace.

The city’s average property value in 2017 was just over $ 1 million, now its $ 1.5 million, according to analysts Valocity.

However, with interest rates on the rise, real estate experts expect house price growth to slow in the coming months.

The house sits on a block of approximately 600 m² in Sunnynook.  Photo / Supplied
The house sits on a block of approximately 600 m² in Sunnynook. Photo / Supplied

The Reserve Bank of New Zealand this week raised the official treasury rate for the second time in as many months – bringing it to 0.75% – and reported at least seven more hikes before the end of 2023.

Kelvin Davidson, chief real estate economist at CoreLogic analysts, said shorter-term home loan interest rates have now reached 4% and are expected to exceed 5% over the next six to twelve months.

While these rates are still low by previous standards, the huge rise in house prices means that many will feel pain in their pockets because of the higher rates.

“With house prices having climbed 28.8% in the past year, mortgage payments as a percentage of gross household income have already returned to 41%,” Davidson said.

“(This is) well above the average of about 37 percent, and the highest since the second quarter of 2008 (when mortgage rates were above 9 percent),” he said .

“A mortgage rate of 5% now would drop that repayment burden to 46%, and at a mortgage rate of 6% it would rise to over 51%, which would be the worst level in at least 18 years. . “

The three bedroom house was built in the 1970s. Photo / Supplied
The three bedroom house was built in the 1970s. Photo / Supplied

Vaughan said “interest rate hikes are just one of the headwinds the housing market will face next year” as more Kiwis are expected to travel to Australia for better wages , thus dampening demand from home buyers.

“Credit restrictions, rising construction costs and possible changes in net migration will all have a dampening effect on house price growth,” he said.

It comes as new council valuations are expected in two of New Zealand’s biggest housing markets.

Valuations are expected next week in Wellington, while valuations in Auckland were previously slated for early next month.

The last CVs were issued in Wellington in 2018, when the city’s average property value was around $ 800,000.

The post-Covid surge has seen the city’s house prices jump more than 50% to an average price of just over $ 1.2 million.

A source of fascination for crazed property Kiwis, CVs – formerly known as capital values ​​- can affect home selling prices as well as the rate bill.

Homeowners who want to sell often hope for a new, higher CV, believing that this could help convince future buyers to pay more for their home.

Higher CVs can also convince banks to lend more money to those who wish to borrow.

But residents who have no plans to sell may face a higher bill from Auckland City Council if their new resume grows too much in value.

CVs also do not change the total dollar amount that boards collect from rates.

Rather, boards decide how much money they want each year, then use resumes to help determine how much each home and commercial property owner pays.

The Auckland board has already declared plans to raise $ 2.3 billion in rates in fiscal year 2022/2023 – the first year the new CVs go into effect.


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