22 Clara St Erskineville auction
100 bids and sold for $800,000 over the opening bid
The property
22 Clara St Erskinville was sold as an unliveable, uninhabitable building. A house is being kind if I’m honest. Even on the floorplan it was referred to as “room 1, room 2”, rather than the usual bedroom, bathroom etc.
A 246sqm block it was last traded in 1978 for $26,000.
Fair to say, whoever bought it was going to need to spend a fair bit.
The site, subject to council approval, is allowed to be developed as a duplex site. This is where a lot of builders look to make money. Realistically though the cost to do the build is at least $1,000,000. Plus the time waiting for council to approve plans. Plus your stamp duty and higher interest costs on the loan during construction.
The location absolutely fabulous!! A quiet leafy street in the heart of Erskineville which is tightly held.
The Auction | ~8 registered bidders | 5 active bidders
It’s not about where the auction starts…
The auction was held in rooms at Ray White Erskineville rather than at the property. I’m not sure the exact reason why, but perhaps it was because it seemed difficult to get people excited about a property that is falling down in front of your eyes. Whatever the reason, it worked.
The bidding opened at a reasonable $1,600,000. I say reasonable because just 12 months prior the property two doors down (18 Clara St Erskineville) in a similar condition had sold for $1,300,000. Just as the opening bid was made a guy turns up as a late registration.
It didn’t actually take long for the bidding to get to $2,000,000 but it felt like that was about where it should have ended. The property was on the market at this point and was going to be sold.
But the auction was just getting started.
Old mate who turned up late, and a couple sat on the couch were just getting started! From $2,000,000 on it seemed that neither of them were prepared to walk away, regardless of the price. There was no slowing down and no stopping them.
Well they did slow from $25,000 bids down to $5,000 and $10,000 increments but the bids were coming in fast. Auctioneer James Keenan had the momentum going and ran a great auction. Eventually, after close to 100 bids, old mate late arrival decides that it’s going to be very hard to make money on this reno job if you pay $2,400,000. But his son who has now joined him inside gives it one last crack at $2,405,000.
The couple on the couch were straight back to retaliate and being over $2,400,000 was not going to stop them.
In favour of the couch sitters, the hammer comes down and SOLD for $2,410,000!!!
Even if this was purchased to redevelop as a duplex, its a tough margin at a purchase price of $2.41m. Stamp duty of $115,000. Build costs of at least $1,000,000. Assume the project takes two years, you’d say about $250,000 in interest costs. Sales agent costs to sell both duplexes of $60,000.
Just to break even, each individual small duplex would need to sell about $1,917,500. If they were to sell today as brand new duplexes I would say each would maybe get $2,000,000.
Is a project like that worth it for such a small margin? Guess only the buyer can run their numbers and decide.
What this result says about the market
What is crazy is that just a couple of months earlier, 16 Charles St Erskineville, a 5 bed, 3 bath, 3 car house on the same size land (238 sqm), sold for $2,327,500. It wasn’t in amazing condition, but it was a lot better condition than Clara St that’s for sure! And it sold for $82,500 less.
One sunny day does not make a summer, but with lack of quality stock the renovation job properties are selling at a premium price in the current market. Or the market is on the move again.