Super Profits For The State

The sale of these two state houses for 50% more then their CV’s is evidence that the Auckland market is approaching a boom phase.

This is not healthy in my opinion. Yes, we all want property prices to rise, but steady as she goes is best, and not by explosive increases.

These two properties may have been in an up and coming suburb, but the houses are dumps, and the “value” is in the land. A new bench mark has therefore been reached for land prices in Sandringham and surrounding suburbs which is not a good thing because it invites more meddling by the authorities to dampen house prices – with all the distortions that will bring.

As these two properties were State Houses, I will be interested to see if the Greens and their supporters will be asking that Capital Gains Tax should  be paid by the State on the  “super profits” made at the expense of the public.

I am not holding my breath on that one.

 

State house duo fetch $1.9m
By Alanah Eriksen
1.3.13

One of the properties, at 94 Haverstock Road in Sandringham. Photo / Supplied
Two neighbouring state homes in need of “extreme makeovers” have reached $1.9 million at auction.

Numbers 94 and 96 Haverstock Rd are the first of 19 properties in the street to be sold by Housing New Zealand.

The corporation says it’s too costly to develop the rundown homes in the flourishing suburb of Sandringham.

House prices and the tone of the street are expected to be boosted following the two sales and the upcoming sales of the remaining 17.

The other homes, described as an eyesore because of boarded-up windows and graffiti-covered walls, are to be demolished and the land sold separately in March to make way for new, private developments.

A packed Bayleys auction room included several bidders yesterday morning, with 94 Haverstock selling for $1.05 million – $350,000 or 50 per cent above its valuation of $700,000.

Both homes sold to Chinese buyers planning to renovate and live in them.

The listing for number 94, a four-bedroom 1950s weatherboard house sitting on a 938sq m section, said the property was “screaming out to be saved by you”.

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10868433

 

Posted in News & Articles | 4 Replies

4 thoughts on “Super Profits For The State

  1. Olly,

    Must be too early for you in the morning, you are missing the point in the value of these sections. They are 2 unit sites at 900m2. So allowing $100K for subdividing costs, they paid $700K for a 4 bed house in Sandringham (seems cheap at even prices 12 months ago) and $400k for a section which is worth $450-500K.

    It’s NOT 50% over the real market value at all………………….

  2. Nope don’t agree. The value in the houses will be lost, the subdividing work will be much more expensive than you suggest and even if new houses are built what will the end cost be plus GST? In any event the CV was supposed to reflect the larger land areas, and 50% over is a bit rich.

  3. Olly,

    These properties were always worth $1M (for around the last 12 months).

    The correct news story here is that the CV values are ridiculously light in Sandringham, and have been for the past 10 years, not that people paid $300K more than the current expected market value for these properties, which is what the news article and your commentary suggests.

    Sandringham CV’s are always incredibly light, I own 4 houses in the area and all the CV’s are $100K – 200K light – just ask any agent. I sold my own home in Oxton Rd for $950K in June 2012, with a less than 12month old CV of $760K, sadly no gross over payment or huge jump in value by the buyer.

    Yes – you lose value cutting off the back lawn, but you gain value with the new section.

    Subdivision costs are $100K (I am a surveyor and spec build in Sandringham) so confident of backing these figures up.

    The houses would be worth circa $700K on half sites and the back lawns $400K or more. So, my point is they have paid what an expected market value for these properties is, and maybe a too much for a developer to make money, but not a significantly higher than ‘currently expected’ price. Which is a shame, as one who is heavily exposed to Sandringham could have just picked up $1M in equity (bugger – no upgrading the Porsche to a new one just yet)

    P.s – I enjoy your books and your blog……………….

  4. Ok Ok but you havevforgotten that each house has to renovated still as they are pure dumps at present. $200k per house? Add that cost in as well and do the maths again.

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