This rundown property is unlivable… but it just sold for a staggering amount above reserve – in another sign of Australia’s dire housing market

A run-down house in Sydney’s east has sold at auction for $800,000 above the reserve price. Another example of Australia’s poor housing market.

The property on Barker Street, in Kingsford, sold for $2.6 million on Saturday at the well-attended auction marketed by agents as a ‘must-sell’ home in a ‘blue ribbon’ location, after the deceased owner had left no will.

Les Salem of Wolf Property Group had prepared a $1.8 million guide for the property located on a 362 square meter block and within walking distance of the Royal Randwick Racecourse or the Australian Golf Club and a short bus journey to Coogee Beach.

“I can’t believe it, all the feedback was $1.75 million,” Salem said The Daily Telegraph.

There were two interested parties who battled it out at the auction once the price rose above $1.35 million.

One was a young professional couple who wanted to give it a much-needed renovation and live in it.

The other buyer, the successful bidder, is interested in demolishing it and acquiring adjacent properties to build a student apartment complex for the nearby University of NSW.

Photos of the property show peeling paint from the walls, mold on the ceiling, uneven floors and areas of missing tiles in the dated kitchen and bathrooms.

The house has uneven floors, peeling paint, missing tiles and part of the ceiling has collapsed

At a similar auction, also on Saturday, a deceased estate on The Boulevard in Strathfield sold for $600,000 above reserve.

The three-storey property, which previously housed a doctor’s office on the ground floor and a residence above, sold for $3.51 million.

Ben Horwood of Horwood Nolan said that in the past six months the market has switched from in-demand newly renovated properties to buyers looking for dilapidated properties they can renovate.

Earlier this year it was revealed that Sydney is the second least affordable city in the world to buy a house, after Hong Kong.

According to the Demographia International Housing Affordability report for 2023, house prices in Sydney had grown six times faster than inflation.

Mortgage arrears for Australian homeowners have hit a three-year high as homebuyers take out huge mortgages in a bid to get on the property ladder.

The insight comes from new CoreLogic figures released last week, which showed payment arrears in the March quarter of 2024 at 1.6 percent.

This figure is the highest payment arrears since the first three months of 2021.

The property was an auction of a deceased estate, where the previous owner had left no will

The selling agent said the house had an appraisal of $1.8 million but sold for $800,000 above that, which is another indicator of the red-hot real estate market

The average variable interest rate on outstanding owner-occupied home loans increased from 2.86 percent in April 2022 to 6.39 percent in March 2024.

CoreLogic director Tim Lawless said there is no end in sight for Australians struggling to meet their mortgage repayments.

“It is likely that mortgage arrears will rise further as unemployment rises, household savings continue to decline and, more broadly, economic conditions enter a period of weakness,” he said in the report.

“However, payment delinquencies are unlikely to experience a material ‘breakout’ unless labor markets weaken substantially more than forecast.”

The rate hike has added nearly $1,600 to monthly payments for the average borrower with $750,000 in debt.