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Prices tumble as buyers hold out for a bargain
5:00AM Sunday March 23, 2008
By Rebecca Milne
'Alan Bollard Special - $100K off price". "Price Slashed." "Now Selling Below GV. You Couldn't Rebuild For This Price."
The property market is in a slump and buyers couldn't be in a better bargaining position. The nation's real estate agents are in fire sale mode, with prices dropping by the day.
A Herald on Sunday probe into what's for sale around the country this weekend revealed hundreds of properties advertising themselves below capital value (CV).
Agents confirmed they were talking sellers into cutting prices by up to 30 per cent.
"I had one vendor drop the price on his land by $300,000 [to $1.1 million] recently," says Waiheke agent Howard Gee of Barfoot and Thompson, who is selling a bach on the island for $105,000 under CV. "It's a buyers' market... [sellers] are ringing up and saying drop this [price] and drop that."
Auckland agent Tom Hendriks, of Ray White, says he is telling sellers to drop their prices now or take their homes off the market for three years.
"For the next 1 1/2 years [the market] is going down and it will take 1 1/2 years after that to come back to where we are now," he says.
"If you're not going to be realistic about price now, you have to be prepared to stay put for a while - no question about that."
One of the first areas to be hit by falling prices is coastal New Zealand where agents say luxury items such as the family bach are affected by the international credit crunch and fears of a recession.
Auckland woman Louise Skinner is selling her Tauranga Bay, Northland bach because of the cost of "life in New Zealand" - the price of food, mortgages and petrol.
"The mortgage on my place in Auckland has gone up and we could hold on to [the bach] and tenant it but it's a squeeze."
Skinner listed the two-bedroom holiday house last winter for $379,000. It dropped to $359,000 and now it's on offer for $335,000. She says agents in Northland have told her that of hundreds of properties on offer since Christmas, few have sold.
And it's not just the cheaper holiday homes. At exclusive Cooks Beach in Coromandel, a property listed at $946,000 last November drew an offer of $950,000. That fell through over Christmas and a revaluation priced it at between $700,000 and $800,000. It is still for sale.
In Auckland, homes in many of the cheaper suburbs in West and South Auckland are simply not selling as buyers sit and wait for bargains.
Families caught with large mortgages, rising interest rates and the growing cost of living are trying to sell quickly - and failing.
In the West Auckland suburb of Hobsonville, agent Rachel Harris of Bayleys has a home for sale at $950,000 - below GV and below the cost of building it.
"They want it sold like last year," she says of the vendors who have dropped their price hoping for a quick sale. "But all the buyers are looking for an absolute steal. A lot are holding off [buying]."
Harris says the Auckland market turned abruptly at the end of October and five months later buyers are being "very coy. I tell people they should put an offer in - you don't know what you might get when the market's like this."
It's the same in the regions.
In Napier, Dave Gearey began building his dream home in Parklands just before Christmas - but wishes he'd begun when he bought the section nine months ago.
The house is just finished and instead of moving in, he's desperately trying to sell, knocking the price down from the valuation of $525,000 to a bargain $489,000.
It's not just the cost of mortgages, food and petrol that's worrying Gearey - building costs rose over that period too. "We aren't making much money on [the house] that's for sure," he says.
In Tauranga, hopeful seller Jenny Hill says prices in her neighbourhood are holding up, but when she bought a new home she knew she'd need to sell her family bach at Waihi Beach.
It entered the market at $730,000 but is now listed at $660,000.
"I'm in the position where I want to sell," she says. "I don't want to make the huge interest payments and this [the bach] is a luxury... I wish I had put it on the market six months earlier."
Andrew King, of the Property Investors Federation, says rising inflation and mortgage rates are fuelling the drop in prices.
"I think all property will be affected, but, potentially, coastal property more because it's more of a luxury item. Prices have escalated and when prices go up they tend to be susceptible to coming down."
But not everyone believes the slump is inevitable.
In Auckland's Mt Albert, agent Daniel Beetham is so confident things will get better he's bidding on a property at auction himself next month.
But a pretty, newly renovated bungalow he's selling in sought-after Lloyd Ave recently dropped its price from $800,000-plus to $759,000.
"I don't think it is going to get any worse," he told the Herald on Sunday yesterday. "We are still selling houses and getting good prices but people aren't paying the stupid money anymore. This is just a reality check."
5:00AM Sunday March 23, 2008
By Rebecca Milne
'Alan Bollard Special - $100K off price". "Price Slashed." "Now Selling Below GV. You Couldn't Rebuild For This Price."
The property market is in a slump and buyers couldn't be in a better bargaining position. The nation's real estate agents are in fire sale mode, with prices dropping by the day.
A Herald on Sunday probe into what's for sale around the country this weekend revealed hundreds of properties advertising themselves below capital value (CV).
Agents confirmed they were talking sellers into cutting prices by up to 30 per cent.
"I had one vendor drop the price on his land by $300,000 [to $1.1 million] recently," says Waiheke agent Howard Gee of Barfoot and Thompson, who is selling a bach on the island for $105,000 under CV. "It's a buyers' market... [sellers] are ringing up and saying drop this [price] and drop that."
Auckland agent Tom Hendriks, of Ray White, says he is telling sellers to drop their prices now or take their homes off the market for three years.
"For the next 1 1/2 years [the market] is going down and it will take 1 1/2 years after that to come back to where we are now," he says.
"If you're not going to be realistic about price now, you have to be prepared to stay put for a while - no question about that."
One of the first areas to be hit by falling prices is coastal New Zealand where agents say luxury items such as the family bach are affected by the international credit crunch and fears of a recession.
Auckland woman Louise Skinner is selling her Tauranga Bay, Northland bach because of the cost of "life in New Zealand" - the price of food, mortgages and petrol.
"The mortgage on my place in Auckland has gone up and we could hold on to [the bach] and tenant it but it's a squeeze."
Skinner listed the two-bedroom holiday house last winter for $379,000. It dropped to $359,000 and now it's on offer for $335,000. She says agents in Northland have told her that of hundreds of properties on offer since Christmas, few have sold.
And it's not just the cheaper holiday homes. At exclusive Cooks Beach in Coromandel, a property listed at $946,000 last November drew an offer of $950,000. That fell through over Christmas and a revaluation priced it at between $700,000 and $800,000. It is still for sale.
In Auckland, homes in many of the cheaper suburbs in West and South Auckland are simply not selling as buyers sit and wait for bargains.
Families caught with large mortgages, rising interest rates and the growing cost of living are trying to sell quickly - and failing.
In the West Auckland suburb of Hobsonville, agent Rachel Harris of Bayleys has a home for sale at $950,000 - below GV and below the cost of building it.
"They want it sold like last year," she says of the vendors who have dropped their price hoping for a quick sale. "But all the buyers are looking for an absolute steal. A lot are holding off [buying]."
Harris says the Auckland market turned abruptly at the end of October and five months later buyers are being "very coy. I tell people they should put an offer in - you don't know what you might get when the market's like this."
It's the same in the regions.
In Napier, Dave Gearey began building his dream home in Parklands just before Christmas - but wishes he'd begun when he bought the section nine months ago.
The house is just finished and instead of moving in, he's desperately trying to sell, knocking the price down from the valuation of $525,000 to a bargain $489,000.
It's not just the cost of mortgages, food and petrol that's worrying Gearey - building costs rose over that period too. "We aren't making much money on [the house] that's for sure," he says.
In Tauranga, hopeful seller Jenny Hill says prices in her neighbourhood are holding up, but when she bought a new home she knew she'd need to sell her family bach at Waihi Beach.
It entered the market at $730,000 but is now listed at $660,000.
"I'm in the position where I want to sell," she says. "I don't want to make the huge interest payments and this [the bach] is a luxury... I wish I had put it on the market six months earlier."
Andrew King, of the Property Investors Federation, says rising inflation and mortgage rates are fuelling the drop in prices.
"I think all property will be affected, but, potentially, coastal property more because it's more of a luxury item. Prices have escalated and when prices go up they tend to be susceptible to coming down."
But not everyone believes the slump is inevitable.
In Auckland's Mt Albert, agent Daniel Beetham is so confident things will get better he's bidding on a property at auction himself next month.
But a pretty, newly renovated bungalow he's selling in sought-after Lloyd Ave recently dropped its price from $800,000-plus to $759,000.
"I don't think it is going to get any worse," he told the Herald on Sunday yesterday. "We are still selling houses and getting good prices but people aren't paying the stupid money anymore. This is just a reality check."
below the vendors original asking price ($519k). Will be interesting to see if the agent comes back to say they want the offer in writing. Next question will be do I want to put it in writing.
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