Developers and builders are trying to clear a backlog of newly completed homes in the Waikato and Auckland as new houses, especially in some of the larger subdivisions, are taking longer to sell.
And while the demand for buying properties off-the-plans is almost non-existent, agents told OneRoof new homes fresh to the market and priced right are still selling.
Lodge managing director Jeremy O’Rourke says new homes are sitting for sale for longer, but this reflects the general slowdown being felt in the market with fewer properties selling each month.
“There are a lot of brand-new homes on the market or coming to market still because it’s hard to turn the tap off immediately.”
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Lodge salesperson Glenn Collins is marketing 11 brand-new three- and four-bedroom homes with two-bathrooms in Lockerbie Estate in Morrinsville in what they are labelling as a “developer clearance”.
Some of the brand-new homes had been listed with another agency before Christmas and with more being completed since then, he said, it had created a bit of “a bottle neck”.
The properties passed in at Lodge’s auction rooms earlier this month and are now priced by negotiation.
He is also marketing a number of new properties in Rototuna, in Hamilton, and has just sold a three-bedroom, two-bathroom home on Tokerau Drive within a week of it being listed.
While two larger four-bedroom, thee-bathroom duplex homes on Maanihi Drive in Rototuna have also just sold for $969,000 and $989,000 respectively, another duplex on the same street has an asking price of $899,000.
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Collins says these newly completed homes that are fresh, priced well offer good value to buyers and are still attracting a lot of interest.
“Sometimes some of these new-builds they do get listed during construction phase and they do drop down the website and, I think because of that, sometimes they can lose a bit of interest in them.”
Most people buying at the moment don't want to wait for houses to be finished as they are either moving into Hamilton or have already sold and need to buy, he said.
“I just don’t think we’ve got that buyer market at the moment in Hamilton where people are going and buying off-the-plans and the house is going to be ready in nine or 18 months' time.”
Banks are also making it harder for people to buy off-the-plan, he added, due to the sometimes long gap between construction and settlement, concerns around delays in construction and the fact that some of the build contracts have variations in them where prices could go up.
In Glen Eden, West Auckland, Barfoot & Thompson listing agent Ying Li Howe agrees that financing is an issue for buyers.
A three-bedroom new-build on offer at 16 Harp Street, in Morrinsville, Waikato. Photo / Supplied
1/18 Tokerau Drive, in Rototuna North, Hamilton, is priced at $799,000 and listed as a must-sell. Photo / Supplied
The lending rules and rising interest rates are making it tougher for buyers, and many have lost confidence in the market, she says.
“Buyers have been put off and it’s showing on the fact that too many properties are sitting there and not moving,” she says.
She has about 51 of 61 properties still for sale in Woodglen including a three-bedroom, two-bathroom townhouse at 20/95 Woodglen Road and 10 left in Rosier Park.
The new townhouses, which are priced from the early $700,000s for a two-bedroom townhouse with study, are now competing with older homes on larger sections which people prefer.
And while they might prefer it, Howe says that not everyone can afford that option because they need a bigger deposit for this compared to the lower deposit and lending incentives available for new-builds.
Harcourts agent Aman Gulia says first-home buyers are quick to pick up new properties - but only after they have been completed and fully staged.
A four-bedroom new-build home at 80 Maanihi Drive, in Rototuna North, Hamilton, has a $899,000 price tag. Photo / Supplied
A two-bedroom townhouse for sale for $725,000 at 27 Morihana Close, in Glen Eden, Auckland. Photo / Supplied
"We had a four-townhouse development in Tango Place, Henderson, that hadn't sold off-the-plan. Once it was completed and staged we sold three in a week, with the fourth under contract. They went for mid- to high-$800,000, but when they were selling off-the-plan they were actually asking a little bit less.
"We are struggling to get almost completed stock, we could sell it in two weeks.
"If it's another six to nine months of finishing, I don't have a buyer. And there are multiple, multiple developers not finishing until the end of this year in that position."
Gulia is also fielding interest from larger-scale investors and commercial private landlords who want to buy an entire development as a rental project.
"These are private landlords, not Kāinga Ora. They're looking at developments with between four [and] 15 terrace houses, pricing around that $800,000 to $1m. Four is ideal, they don't want to saturate all in one market. Properties up to $1.2m to $1.4m they're not interested.
"They want three bedrooms, because that gives them the rental returns. Now they're looking purely at returns, aiming for 5% to 6% yield, they can get capital gains eventually.”
Valocity head of valuations James Wilson agrees that selling vacant land or houses off-the-plan is much harder to move when land values start going backwards.
20/95 Woodglen Road, in Glen Eden, Auckland, has an asking price of $825,000. Photo / Supplied
Harcourts agent Aman Gulia: "You’re better off saying to the builder it's better to build it and I’ll sell it when it’s ready.” Photo / Fiona Goodall
“Why would anybody – an investor or a first-home buyer – sign up now if, when they take possession – it could be in 12 months, it could be in two years given the constraints under the building sector – your land value is likely to have gone down. You’re better off saying to the builder, if you want top dollar, you're better to build it and I’ll sell it when it’s ready.”
If some completed new properties don't sell due to both a drop in demand and increase of stock in the market, then a builder or developer might have to choose to meet the market or rent the new-build out, he says.
At the end of last year, a developer decided to sell their home with a granny flat on Dungloe Ave by throwing in a brand-new Tesla Model Y in order to help the property stand out in the swamped Flatbush market where there were a large number of five-bedroom-plus homes for sale.
“This is the time when you start to see those incentives creeping in quite heavily. It may be a pay your mortgage for whatever, it might be a new car. We’ve all seen examples – they creep in now – because the developer wants to get that price point still and given an incentive to buy, the next thing they will do is begin to drop the price of that new stock if they can afford to do so,” Wilson said.
- Additional reporting Catherine Smith
- Click here to find more new-build properties for sale
