Cheap houses can still be found
Data shows you don’t need hundreds of thousands to buy a property, writes Susan Edmunds.
Aone-bedroom apartment with remediation issues was Auckland’s cheapest residential property sale in the last quarter of 2019, new data from Homes.co.nz shows.
The 34 square metre apartment at 135 Hobson St, Auckland Central, was advertised as a short-notice auction in a ‘‘building about to be upgraded’’.
It changed hands for $140,500 in December. The cheapest freestanding house in the city was a two-bedroom property on Royal Rd, Massey, which sold for $416,000.
In Wellington, an apartment in the Quest on Johnston St was the cheapest sale, at $122,000. A property on Main Rd, Tawa, was the cheapest house, changing hands for $348,500.
In Christchurch the cheapest transaction of the quarter was a property on Pacific Rd, North New Brighton, that sold for $150,000.
In other parts of the country, a property on the Ohai Clifden Highway sold for $50,000 and one on Poole St, Kaitangata for $45,000.
‘‘If a property’s price seems too good to be true, then I’d suggest it probably is,’’ said chief data scientist Tom Lintern.
‘‘Although good DIY opportunities do exist, others may be leasehold or have some other hidden hazards, so make sure you perform all your diligence before purchasing,’’ he said.
‘‘It comes as no surprise that apartments offer some of the cheapest options in Auckland and Wellington, but these provide a great way to get on the property ladder.’’
Property investor Graeme Fowler would not recommend buying a property as an investment in a very small town. ‘‘Apartments can be OK but you need to look at the net yield. That is the cashflow after all expenses including body corp fees.
‘‘Quite a few apartments in Auckland are also leasehold, so again you need to be aware of all costs.’’
The rental yields on cheap properties tend to be significantly better because, while the sale price is a lot less, the rent that can be charged on the properties is not proportionately reduced.
‘‘Small places tend to have lower-priced properties and reasonably good rental yields,’’ New Zealand Property Investors Federation spokesman Andrew King said.
‘‘So they can be extremely attractive to some property investors. However they tend to have low tenant demand, as many people in these areas find it very easy to buy their own place.
‘‘There is also a risk with how they will perform economically. They often have one source of employment and if that business or industry either reduces or goes out of business altogether, you can find yourself with a rental property that no tenants want.
‘‘If the local population is stagnant or falling, then property prices may not increase. A lot of knowledge needs to be obtained to make sure you aren’t buying a property that could turn out to be a complete dud.’’
The cheapest sale of the quarter overall was a property in Nga¯ rimu Bay.
It sold for $30,000 after having its rateable value reassessed from $440,000 down to $29,000. The property was bought in 2005 for $425,000.
A spokeswoman for ThamesCoromandel District Council said it was affected by a land slip during a storm in 2017.
‘‘We understand the owner applied to the Earthquake Commission for compensation and has been paid out.’’ Earthquake Commission insurance on the land had been cancelled.
Real Estate Institute chief executive Bindi Norwell said people should be cautious when looking for very cheap properties.
‘‘We always advise people to undertake due diligence before buying a property, but if the asking price seems to be very affordable when everything else feels out of reach, this is a sure sign that you really need to do your homework,’’ Norwell said.
‘‘There are varying reasons why a property might be sold below market rates. Issues could potentially include cladding/ weathertightness problems, unconsented work, mortgagee sale or leasehold land.’’
The cheapest residential property currently listed for sale on Trade Me is a cabin at the Te Puru Holiday Park, in ThamesCoromandel, with leased land, for $15,500.