Cambridge Edition

Bargain hunters out of luck as sellers hold firm


Falling house prices are tempting bargain hunters, but true deals are hard to find because sellers are not desperate to sell at any price, agents say.

The housing market has now turned. The largest quarterly decline in prices since the global financial crisis (GFC) was recorded over the three months ending July, according to CoreLogic.

There are more homes available for sale too. The national number has more than doubled over the past year to 26,358 in July,’s latest figures show.

It means many regions are now considered to have ‘‘buyers’ markets’’.

Traditiona­lly, it is at this point in the property cycle where bargain hunters emerge, with the goal of picking up a cheap property from a seller with few options.

But agents from around the country say while there has been a slight increase in such buyers, it is not a significan­t trend.

Tommy’s Real Estate sales director Nicki Cruickshan­k says there were quite a few bargain hunters in the Wellington market a couple of months ago.

‘‘They were out there offering ridiculous­ly low sums, trying to get a cheap property, and not really caring what it was. The odd one managed to pick up [a property], and then seemed a bit surprised.’’

But there is less evidence of those types of buyers now, as sellers have adjusted to the current market reality: prices that are down by about 10% to 15% from last year, she says.

‘‘They are more accepting of the need to meet the market, and there is more scope for negotiatio­n, but they are not going to drop their pants by a silly amount just to get a sale.

‘‘Sales are taking longer, but they are still happening. It’s just that buyers are measured, and taking their time, because they have more choice.’’

This marks a return to a less mental market than last year’s where buyers had to take whatever they could get, she says.

‘‘Now, it is balanced and quite flat, with buyers and sellers meeting the market.’’

Highly price motivated buyers are present in any market because people always want to buy well, Ray White chief operating officer Daniel Coulson says.

The question is whether they are actually finding bargains at the moment, and the answer is probably more a matter of perception, he says.

‘‘If someone has been looking for a couple of years, they might see a property selling for much less than a comparable property sold for last year, and see that as a good deal.

‘‘But it is really about comparing properties to what else of a similar type is available in the market right now and for what, and that makes it much harder to quantify a deal.’’

Coulson says that homeowners who are buying and selling might think they have got a cheaper deal on a purchase, but they have to sell in the same market, so it will make little difference.

Currently, buyers and sellers are less speculativ­e, he says.

‘‘Sellers aren’t putting their home on the market to see what they might get, while buyers are looking because they are up or downsizing, or moving. Transactio­ns are taking place for genuine reasons.’’ Some property types, such as high-end homes in Auckland’s central suburbs, continue to attract high buyer interest, but more negotiatio­n is happening, he adds.

‘‘But negotiatio­ns are not just about price. Often they are about terms, such as deposit size or the length of settlement time. Longer settlement times are increasing as they give the buyer confidence they can take their own property to market without problems.’’

The situation is very different to the last significan­t market downturn, after the GFC, when a wave of distressed sales hit the market.

All the agents interviewe­d say they are not seeing mortgagee sales, or people selling up due to financial pressure.

Jeremy O’Rourke, from

Lodge Real Estate in Hamilton, says if a bargain hunter identifies a good value property, but then offers far under the asking price, they will not get far.

Some properties are selling for below CV, but those CVs are from late last year, and the market has pulled back to the sort of prices at play about 12 months ago, he says.

‘‘But we are not seeing prices where you think ‘gee, I wish I had grabbed that’, and agents are not saying they’ve just sold the bargain of the century.

‘‘Sellers are just not in a situation where they have to close and accept any sort of price, and there is no desperatio­n selling at this point.’’

Low unemployme­nt and a tight labour market, along with bank stress testing of loans at higher rates than have been available, are the main reasons for that, he says.

It is often first-home buyers and investors who focus on finding a bargain. But first-home buyer numbers have dropped off due to difficulti­es accessing finance and market uncertaint­y, while investors continue to sit on the sidelines.

Nick Gentle, co-owner of iFindPrope­rty, a nationwide buyers’ agency for investors, says that at this point in the cycle many investors would usually be looking for deals, but new tax rules mean they are holding back.

But there are some good deals out there for investors who are able to get the finance, and can make the numbers work despite the tax rules, he says.

‘‘Many are off-market, but one example is a Rotorua property with 9% yields we found for a client, who turned it down. Another are some Wellington flats, which used to have a 5% to 6% yield, and now have a 7% yield.’’

If it is possible, it is a good time to buy, but many people are nervy as they are not sure what is happening with the market, and feel like they are swimming against the tide if they buy, Gentle says.

‘‘People tend to go with the flow. There is that Warren Buffett advice to be fearful when others are greedy, and greedy when others are fearful. It looks sexy on Facebook, but it is hard to do when you are the only one in the auction room.’’

 ?? MONIQUE FORD/ STUFF ?? Buyers at a recent open home. Buyers have more choice than last year, but sellers have adjusted to the current market reality, and aren’t usually accepting lowball offers, say agents.
MONIQUE FORD/ STUFF Buyers at a recent open home. Buyers have more choice than last year, but sellers have adjusted to the current market reality, and aren’t usually accepting lowball offers, say agents.
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