- Speculators are buying and quickly reselling properties, targeting cheaper homes in hopes of market gains.
- Ray White’s Tom Rawson warns of the risks, noting profits are often negligible, around $5000 to $10,000.
- Increased speculator activity is pricing out property traders, with competition driving up auction prices.
Speculators are back and are scooping up properties to resell almost immediately, agents have told OneRoof.
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Agents in South Auckland have noticed more “flippers” in their auction rooms this year.
The agents said speculators were targeting cheaper properties and hoped that a lift in the market would help them score a profit when they resold.
Ray White Manukau co-owner Tom Rawson said that this new crop of buyers was taking a substantial risk because the market had not risen significantly. “These guys are hoping for a miracle,” he told OneRoof.
A deceased estate sold this year was in need of a basic renovation and traders could see how they could easily add value. Photo / Supplied
He said the chances someone paying more for the same home a month later was “a coin toss”.
Rawson said the profits some of these speculators would make were negligible – $5000 or $10,000 if that.
“In 2021, when the market was going up, we had people buying property and then on-selling it a week later because it was worth more, and that was all good until the market turned, and then what do you know? All these people had no other plans for their purchases. They couldn’t settle, they didn’t have funds.”
The return of speculators had affected property traders, who buy neglected properties and renovate them to a high standard to resell. Many were being priced out of the market, Rawson said.
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He pointed to the competition for a “fairly simple” two-bedroom do-up on Alfriston Road, in Manurewa. The auction attracted 33 registered bidders – a mix of traders and speculators – and sold for $621,000.
Rawson was also aware of a property in Clendon Park that had been snapped up in the last two weeks and was due to be relisted with another agency.
Many of these purchases had on-sell clauses in the sales agreement, which allowed the buyer to market the property once it went unconditional. This would mean the buyer could resell the property before settling on it.
Harcourts agent Alex Dunn, who sells in Papakura, also noticed an uptick in activity by speculators in the last six weeks.
Some were “very cheeky”, he said. They would ask for long settlements and would likely do nothing to the property. He often saw the same property back online using the same marketing photos the very next day.
A packed auction room at Ray White Manukau this year. Agents have noticed an uptick in activity from traders and speculators, as well as investors and first-home buyers. Photo / Supplied
“They never settle. They on-sell it straight away. I’ve been seeing it more since the beginning of February, but honestly it never really went away,” he said.
“With that forecast of things getting better, they [speculators] are more willing to take a gamble.”
A two-bedroom, one-bathroom property sold at auction in mid-February. Within two weeks it was relisted with a different agent and with an asking price that was about $30,000 more than the purchaser paid.
Dunn said some of these speculators were transparent about their plans, while others were more underhand about how they went about it.
Ray White Southern Corridor business owner Sandra Bullock told OneRoof she had heard of several deals that had already fallen over this year, where a speculator had purchased the property and then walked away from the deal when they couldn’t resell it in time.
Bullock urged sellers to do their homework. If they were selling to a speculator, they should ensure they did not undersell their house, they received a deposit, and they did not have to pay the commission to the agent if the deal fell over.
A property trader told OneRoof he had missed out on dozens of properties this year as a result of increased competition from speculators. Homes that should have sold for between $700,000 and $900,000 were selling for at least $100,000 more. He said there was no margin in the property at that price point.
The trader, who asked not to be named, said with people paying over the odds for houses in certain areas, there was a risk that it would create a market spike.
“If you are not constantly looking at property every single day or making offers or bidding on properties and suddenly you find out that the market has increased over a short period, that could create fear of missing out and suddenly everyone starts worrying about the buying.”
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