The Property Market Blog

This week The Economist released their annual assessment of housing markets around the world which concluded that “…home prices are overvalued by about 25% or more in Australia, Belgium, Canada, France, New Zealand, Britain, the Netherlands, Spain and Sweden…”

You can read the full article here: http://www.economist.com/node/21540231 and then it’s worth referencing Tony Alexander’s weekly email newsletter which provides a more useful and insightful view of the future of houses prices in NZ: http://www.bnz.co.nz/static/www/docs/weekly-overview/w2011-12-08.pdf

The good bit starts on page 8 and gets really good on page 12.

I’ve just changed The Property Market’s commission structure. Up until last week we charged clients 1% up to the CV of their property and 5% on the remainder above it plus GST but we now charge a more simple and straightforward fee of 2% of the sale price plus GST.

The concept behind the old commission structure was that it explicitly motivated us to work hard to get the best possible sale price and while it got us a fair bit of notoriety and some handy press coverage, the reality was that it rewarded clients who had a high CV because they paid significantly less than those with a low CV and for whom we achieved a high sale price.

The 1% bit of the old fee structure also appeared to create a perception that we were a budget real estate agency and any misconceptions around us just being cheap couldn’t be further from the truth. The feedback we get from our clients and our buyers makes me proud to have my name over the door and there is rarely a week that I don’t receive a call or an email thanking us for our time and energy and remarking on how the service we provide is a cut above anything else they have experienced.

The transaction of property – whether it’s for an investment or to provide a family home – is a hugely emotional decision so the real opportunity in my mind is to create a smarter real estate agency model that allows us to provide a better service. That’s why I’m hell bent on steering clear of the self-employed contractor status used by other real estate agencies and instead having salespeople who are employees on a base salary with a commission bonus for making a sale. This model exists in other countries (eg the UK) and also in pretty much every other organization on the face of the planet that has a sales team so I can’t for the life of me see why it can’t work in real estate. It also means I can employ a different type of salesperson and as real estate generally requires a truck load of energy, it makes sense to work with young, well educated people who don’t have any preconceptions about the industry and who are every bit as ambitious as I am to try a different approach to selling property.

Being a Brit by birth, the word townhouse conjures up gentrified and noble connotations. Townhouses were originally the city residences of members of the aristocracy and more often than not, they were terraced dwellings – squeezed together side-by-side in much the same way as the homes of far less wealthy city residents – but they were significantly larger and in more affluent locations.

It’s ironic then, that the word townhouse has such positive connotations but terraced housing doesn’t. As a kid I grew up in a Victorian terraced house in a close-knit community in central London. You could easily argue that the strong relationships we had with our neighbours was shaped by the closeness of the housing in which we lived; the highs and lows of family life were dimly audible through the thick brick walls, burglaries were quickly noticed and reported to the police, we spent long summer evenings playing and barbecuing in each other’s gardens and most Sundays we took turns hosting lunch and killer poker tournaments. In my mind those days are a big jumble of arms and legs, laughter and tears, kindness and quarrels and as a family, we’re still in touch with many of those neighbours all these decades later.

A well executed terraced house is the perfect answer to the modern day requirement for compact, centrally-located housing and to my mind, the townhouses on Napier Street in Freemans Bay are the best example of townhouse design in this country. These houses were designed and built in the 1980s by the well renowned architect Marshall Cook who is known for his ability to marry pragmatism with experimentation.

The block stretches the length of one side of Napier Street and sits tucked behind Franklin Road, shielded from the city which tumbles down Victoria Street West behind them. With their colourful facades, the block previously known as the Fruit Bowl is the defining characteristic of the street (although as the years go by, subsequent paint jobs have seen the exterior colour schemes become more muted.)

Cook’s simple and practical design can be seen throughout these properties. The kitchen windows jut out onto the street, filling the space with natural light and making it easier to get rid of cooking steam and smells. Floor-to-ceiling windows and doors extend across the rear of the houses and look out onto secluded north facing gardens, warming the interior of these homes naturally with the sun. Parking is tucked away off the street in garages behind the houses with access to each property coming directly in from the back garden so there’s no interruption to the façade of the block and late night revelers can’t disturb the people sleeping inside when they come home. A procession of mature trees along the street filter the light throughout the day and buffer the noise of the city behind and the spacious interior floor area includes a separate laundry and a guest loo. Ownership is on individual Unit Titles with equitable and neatly defined boundaries and the annual Body Corporate fee is entirely reasonable.

These tough but chic little properties are made of robust and durable materials and their skillful use of light and climate is a signature theme in Marshall Cook’s work. The columns, arched doorways and sliding shutters that adorn the front of the properties help to create a bustling street atmosphere and reflect the intensity and liveliness of the area. An aerial view of the block reveals a jaunty tangle of houses, gardens and garages that complements the slightly dotty exterior.

It’s clear that I’m not alone in my love for these properties; when my colleague James and I sold one of these townhouses a few months back, we were flattened by the number of buyers who wanted to have a look through and we had presented our client with the first of several offers only a few hours after the sign had gone up. The only two open homes we held were over-run with buyers, many of whom lingered in the sunshine spilling across the living room long after closing time.

No doubt Marshall Cook’s Napier Street townhouses will continue to increase in popularity as they are every bit as enduring as they are endearing. And with the average Freemans Bay sale price exceeding its CV by around $115,000, they will no doubt continue to increase in value as well. The new developments rolling out at Victoria Park Market and Rhubarb Lane and the rejuvenation of historic local landmarks like the Campbell Free Kindergarten building and the Rob Roy Hotel are set to make Freemans Bay one of the most exciting suburbs in central Auckland. Mr Cook’s perfect townhouses will finally be in good company.

I’ve had an obsessive fascination with a property at the north end of Elizabeth Street in Freemans Bay ever since I viewed it some years ago when it came up for sale.

At the time it was a dilapidated shell which for the previous 70 years had been a 19 bedroom boarding house for the elderly and mentally ill (I’m told that one resident – an old lady – lived beneath the stairs for 30 years.) The wiring was original, the walls were scrim and there were holes in the weatherboards wide enough to drive a bus through but the view across the Costley Reserve gully and back to the city was to die for. The property was clearly beyond my financial limits but for weeks afterwards I dreamed that it was mine and still to this day I take regular detours past it to say hello.

By indulging my fascination, it transpired that I was also following in the footsteps of my predecessors as the property was built by a local real estate agent called Michael Woods in the late 1800s. Woods was a landowner (Wood Street is named after him) who had purchased a three hectare estate called Brookville in 1858 which stretched from College Hill to Elizabeth Street and which he subsequently divided into 121 allotments and sold in 1864.

Woods kept the largest section for himself and using some of the first Kauri harvested from the Waitakeres, built a substantial house on it for himself which burnt down in 1882 and which he replaced with another even grander property, this one built in the style of a Thames goldfield hotel. The new house boasted the double return verandas and epic square symmetry of its era and being sited at the highest part of the estate, would have dominated the new sites around it, a constant reminder to the new neighbours that it had been there long before them.

The property is now owned by the Mahon family who have spent the past 3 years painstakingly restoring it, weatherboard by weatherboard. Their story is both hair raising and eye watering; they took to wearing balaclavas in bed in winter when the wind gusted through the walls, they had to decamp for 2 weeks when the living room floor caved in, they have existed with a makeshift bathroom purchased from TradeMe since they moved in and the cost of renovation continues to confound and amaze the project team.

‘The house has resisted its restoration,’ Warwick cheerfully told me, but the next era of this incredible property is starting to emerge and it’s a testament not just to the Mahon’s dedication and tenacity but also to the ability of this incredible house to elicit adoration from even the sternest heart. The remodelled house includes a cinema, a gym, 3 car garaging, a library, a music room, gardens designed in a neo-classical style and a floating deck with steps down to a heated pool. Warwick and Alison are also restoring the fireplaces and reinstating the ceiling mouldings to ensure that this fabulous and enduring property is returned to its prime.

The result will be a spectacular and truly individual home that is a fitting return to its heritage and with the average sale price in Freemans Bay increasing by 24% in the past 3 months alone*, the Mahon’s efforts will one day be handsomely rewarded. Hats off to you, Warwick and Alison, Michael Woods would be proud.

*Source: REINZ