A property based in the Auckland city suburb of Mt Eden has sold for $1.45 million above capital value (CV).
It comes as a shortage of listings and record-low interest rates have increased buyer demand. The 5-bedroom property is located in Hona Ave and has a current CV of $2.825 million.
Real estate agency Ray White confirmed on Thursday that it sold for $4.280 million - a whopping 51 percent above the CV.
"Going in, we knew we had people around circa $4 million, obviously with a CV of $2.8 million that's quite a big difference," Ray White real estate agent Mike Robson said.
"Buyers are trying to compete with each other.. .the cost of money as in low interest rates are driving a lot of it."
Based in a small cul-de-sac and zoned for Auckland Grammar and Epsom Girls' Grammar, the property was refurbished with new paint and carpet, and included a pool and cricket pitch.
"Fill your summer months with cocktails poolside as the kids splash and play, in winter sip a mulled wine soaking in the spa, or year-round enjoy backyard cricket on the astroturf," the listing read.
After 130 groups attended the open homes, there were six active bidders at the auction.
Although initial feedback on the property's value was "in the mid-3 millions", the agency tries not to quote value.
"We leave that to the buyers... their perception of value is changing because properties around them are selling for a lot higher than people think they should be."
Contrary to anecdotal reports of expats driving up prices, Robson sees more demand from locals.
"We're not seeing a lot of expats: it's more the local people... because of the low interest rates [they're] wanting to step up."
Due to COVID-19, Auckland property 3-yearly revaluations are delayed until 2021. This means Auckland property CVs are still based on 2017 figures.
REINZ chief executive Bindi Norwell said although buyers in Auckland pay an average of 9 percent over the CV (10 percent above CV in Mt Eden), it's not a reliable guide on what a property is worth.
"A sale for 51 percent above CV would be towards the higher end of the scale in terms of what we’re seeing, but it's not completely out of the ordinary in the current market," Norwell said.
Until recently, compared to the rest of the country, buyers in Auckland paid the closest price to the CV.
"From December 2018 to August 2019 Auckland was the only region in the country where properties were selling for below CV," Norwell added.
With the country now in COVID-19 alert level 1, property listings are expected to increase in the coming months. This may help ease some of the pressure on demand.
"Usually as we head towards summer, we start to see more properties coming onto the market, so hopefully we'll see the same again this year," she said.
Auckland Council says that property valuations use a combination of recent sales of comparable homes, rent levels and other market data. If a code of compliance is lodged, this will trigger the CV to be reviewed.
The 2020 revaluation has been postponed for a year, property CVs will be updated in November 2021.
