No bed or bath: New Zealand boat shed sells for record $2m despite housing market crash
A converted boat shed in Auckland that cannot be slept in and doesn’t have a bathroom has sold for more than NZ $2m (£970,000), as sky-high prices on some properties endure despite New Zealand’s housing market crash.
The shed does not include a bedroom, toilet, or full legal title, and zoning rules mean it cannot be inhabited or stayed in overnight – but it sold at auction this weekend for NZ $2,050,000.
The boat shed is protected by heritage laws, and has a small wharf that extends out on to the water, but the buyer will not gain a freehold ownership title – the price of sale buys a licence to occupy, rather than possession of the land.
Its sale comes as New Zealand’s housing market is on a steep slide, but eye-watering prices, including for unusual properties, endure in some of its largest cities. While the housing market is down 18% since mid-pandemic peaks, national average house price is still $950,000 – about 12 times the average household income.
In 2022, a derelict Auckland home, described by the real estate agent as being in “dire” condition, sold for $1.7m. An abandoned villa with no toilet and smashed-in doors sold for $2.075m.
The boat shed has some unusual factors: it is being sold as a “day bach” – a holiday hut – rather than a potential residential home, but it still broke previous records for properties in the waterfront row.
New Zealand’s recent crash in prices has made international headlines, but still has some way to go before it brings house prices close to pre-pandemic levels: in early 2020, the average was $755,000, spiking to $1.098m in February 2022, according to Oneroof data. The drop began after the government tightened tax rules for property investors, and the country’s reserve bank repeatedly raised the official cash rate in an effort to rein in high inflation.
The jumps in the cash rate have increased the cost of debt for banks, which in turn passed costs on to mortagees in the form of steadily increasing mortgage interest rates. Those factors have contributed to the sharp downturn in New Zealand’s housing market, which is set to continue: in May, Treasury predicted house prices would continue to fall, bottoming out in late 2023 with a total drop of 21% from November 2021.
With no capital gains tax and a long-term shortage of housing supply, property has become the primary mechanism of wealth accumulation in New Zealand. A substantial portion – 57%, according to the reserve bank – of the country’s wealth is tied up in housing, and the recent crash has wiped billions of dollars of wealth from property owners and investors.
Still, some properties continue to break records – including the $2m boat shed. The previous price record for one of the sheds in the row was $1.35m two and a half years ago. The high prices are perhaps particularly notable given the houses are not eligible for financing from banks, so must be bought with upfront cash.
• This article was amended on 27 June 2023. An earlier version incorrectly gave the final sale price as NZ $2,000,050.