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NZ Auckland property: 17 suburbs in $1m club

Property Here - Tuesday, May 28, 2013

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Auckland's booming residential market has pushed 10 new suburbs into the $1 million-plus club - raising the number to 17.

And the city is just $15,000 off reaching its first $2 million suburb, which could happen in the next three months, economists say.

Herne Bay has an average property value of $1.985 million, a rise of 18 per cent over the past two years.

The 10 suburbs that in the past three months have joined the $1 million club - in which the average house value exceeds that figure - are Westmere, Ponsonby, Mission Bay, Devonport, Mt Eden, Freemans Bay, Campbells Bay, St Heliers, Kohimarama and Grey Lynn.

They join seven old hands in an elite bracket dominated by inner-city suburbs. Three on the North Shore also feature.

The QV figures will be officially released next week - in the Herald's quarterly Property Guide.

The big mover is Westmere, where average prices are up 31.5 per cent in two years.

If Auckland prices continue to move in line with predictions from some economists over the next nine months, four more suburbs will have joined the $1 million-plus club by early next year: Narrow Neck (with an average value of $986,444), Orakei ($967,222), Glendowie ($939,222) and Castor Bay ($924,778).

In some North Island rural towns, $1 million houses are a fantasy. An average home in Taumarunui and Kawerau, on sections that would dwarf Auckland's, gives plenty of change from $100,000. Prices are now 25 to 32 per cent down on the peaks of 2007.

A Herne Bay home-owner looking for country air could cash in their $2 million villa and buy 22 homes in Taumarunui with enough left over for a world cruise.

In the past year, Bayleys real estate agent Karen Spires has sold more than 30 properties around Herne Bay for more than $1 million each, including one in Bella Vista Rd for nearly $7.2 million.

The 1910s weatherboard had a section of 1143 sq m and sold for $1.6 million above its valuation of $5.5 million.

It was owned by Connel Mclaren - whose animal healthcare magnate father Don Mclaren was worth $125 million on the rich list last year - and his wife Keitha.

The sale was the second-biggest of Ms Spires' 15-year career - after an $8.45 million mansion at 8 Wairangi St, formerly owned by the Sultan of Brunei, in 2008.

Ms Spires said one vendor had recently turned down $1.93 million for a four-bedroom "run-down" villa on Sarsfield St.

"They're not mansions. I sold a do-up on a good-sized piece of land in St Marys Bay for $1.960 million and it basically needs to be rebuilt from the ground up. It was a piece of land. And land goes for $2 million in Herne Bay."

You'd have to spend more than $3 million to get a mansion, she said.

ASB chief economist Nick Tuffley said Herne Bay could reach $2 million within three months.

But house prices were stretched compared to incomes and there would come a point where there had to be "a bit of a constraint on how far people are prepared to push up house prices".

He said more building and higher interest rates would help cool the market. It was already starting to pick up with more building consents being issued.

The Reserve Bank was expected to put up the historically low interest rates early next year, Mr Tuffley said.

The number of house listings was lower than they were during the 2007 property boom.

Real Estate Institute chief executive Helen O'Sullivan said prices were rising as there had been "a drift north" from Wellington, with companies like Westpac moving their head offices to Auckland.

"We get an end result with people at that upper, Herne Bay end of the market coming to Auckland looking for somewhere nice to live, and they look in all the same places that Aucklanders already like living."

QV uses a valuation tool focusing on comparable local sales and other factors to set constantly adjusted values for most homes in New Zealand and, from that process, fixes average house prices for individual suburbs. Flats, apartments and office buildings are not included.

Suburbs in 1m club

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