Agents are reporting Auckland’s lockdown is pushing some people who have settlements looming near to the point of panic.
Some people have sold houses without buying first and others have bought without selling, each scenario creating problems intensified by the weeks’ long hiatus brought about by the city going into a level 4 lockdown.
In many parts of the city already low listings have fallen further – in Pt Chevalier, for example, only 20 properties are currently listed for sale on OneRoof.
Derek von Sturmer, from the Professionals in Pt Chevalier, says they have clients who sold before lockdown who now have settlement dates looming who are concerned they have to move out of their home without having found another one to buy.
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“There are going to be people in that position where they do need to buy property before their settlement date does come up.
“It is incredibly hard times for some families who feel like they’re going to be homeless.”
Others who bought before they sold are having to approach the bank to get bridging finance because they will own two properties.
Banks so far have been accommodating, von Sturmer says.
Auckland’s Pt Chevalier. Currently the suburb has just 20 houses listed for sale. Photo / Fiona Goodall
“I haven’t had any clients have any issue with that at this stage so luckily because the interest rates are still quite low that is the saving grace per se.”
Von Stumer’s advice is to see if it’s possible to get an extension on the settlement date and if that’s not possible talk to a mortgage adviser.
Some parties might be in a position to give an extension, but there will be others who have already bought another property themselves who can’t change the settlement date because their new property is also under settlement.
“They’ll have their own circumstances they’ll be trying to organise as well.”
Asked if people should not sell before they buy because of the risk of further lockdowns in an unpredictable Covid world, von Sturmer says there is always a risk.
Selling now with such low stock levels means people should get a premium price but then they may find it hard to find something to buy, but buying before they sell could put them in stress if there is another lockdown.
It’s a balancing act, von Sturmer says, and there can be ways around some situations. For example, some buyers who can wait to move in may be willing to offer up to six months settlement dates.
“They might offer a fantastic price and give that owner six months to find something.”
Tim Hawes, principal of Ray White Kingsland, where only 15 homes are listed on OneRoof, says low stock throughout Auckland pre-dates the lockdown but the Level 4 shutdown has contributed to people not bringing properties to market.
Covid testing in Auckland. The hard lockdown in the city is set to continue for at least another week. Photo / Getty Images
He also says settlement dates are a problem for some people and while there is not yet panic, for some who have a date pending but with nowhere to go the situation is urgent.
“Let’s just say if we end up in level 4 for another two weeks or another, touch wood, three weeks or whatever, then those deadlines are only getting closer.
He suggests when selling without buying first people plan for the worst, in the hope it won’t happen.
“That plan might be lining up a rental you’re going to potentially live in for six months.”
To the north of the city, Harcourts agent Karen Franklin, who sells on the Whangaparaoa Peninsula, also fears for some people caught by the lockdown.
Agents may have recommended they be in a cashed-up position to have a better chance of buying so have sold their house, intending to look for another after they had sold, but the lockdown delay means they now face having nowhere to go.
“They talk about FOMO (fear of missing out) for buyers but I think for a lot of people it’s desperation, because you’ve got people at the moment who have sold their houses and they’ve lost four weeks of their buying time.”
Mortgage adviser Rupert Gough says bridging finance is an option for those who have bought without selling.
“It takes a bit of work because there’s a bit of a risk for the banks but it’s definitely possible and if it’s for a valid reason like Covid-delayed settlement it would be fine, I think.”
And while an expensive option, that’s only temporary.
“You’re paying interest on a mortgage for a very short amount of time. I think it would be a couple of thousand dollars but otherwise you’re just not going to be able to settle – it’s probably more expensive not to settle for the penalties that come with that.”
Whichever situation people find themselves in, they should be in regular contact with their lawyer, Gough says.
