Buyers looking for new builds in parts of South Auckland are being swamped with choice as desperate developers try to sell off stock.
In one suburb, Papatoetoe, one agency head reckons nearly half the listings coming to market are newly finished.
“These are the pockets, Papatoetoe and Manurewa, where people were heavily buying development land in 2021 and 2022, so this is the flow on. The conveyor belt is hitting the finish line,” said Tom Rawson, co-director of Ray White Manukau.
“They’ve always been very desirable suburbs for developers because the end product is very popular. You’ve got families who’ve lived here all their lives, and the kids want to buy in the same area – something smaller and cheaper, but close to family.
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“They’re insulated, double glazed, heated, some people prefer that and the banks certainly prefer lending on them.”
However, developers were struggling with their timing, with consents and then building taking much longer than anticipated, Rawson said. “We needed to shorten the conveyor belt.”
There has been a significant lift in the number of homes brought to market in the suburb. New listings volumes in the four months to the end of April this year are up 64% on the same period last year. And of the 320 Papatoetoe residential listings live on OneRoof.co.nz on May 20, nearly 60% are new-build homes.
One of the agents in Rawson’s Ray White team, Monika Maynard, has five new townhouses for sale in Totara Heights, the suburb that runs between Papatoetoe, Manukau city and Manurewa.
“They didn’t sell off-the-plan, and now even with a CCC and title, we’re still trying to find buyers.
“These developers bought for a premium, their building costs went up and now they’re just trying to get their money back and it’s just not happening at the moment.”
She added that many developers had bought at market peak. “They’re not yet ready to accept that they’re going to have to sell at break-even or less. Their hold costs are definitely creeping up,” she said.
One of her listings, a three-bedroom townhouse at 12 Shahkot Way, in Papatoetoe, highlighted the current state of the market. Records show the property was built in 2021 and purchased in May 2022 for $840,000.
Maynard’s listing, which went live on May 15, boldly calls on buyers to “present all offers – this must be sold”.
She told OneRoof last week: “We’ve got our first open home this weekend. Normally I would have received a good five to 10 enquiries by now, we’ve got one.
“It’s really hard because you can now buy brand new for cheaper, because the [developers] understand there’s a lot of competition. There are a lot of builds going on at the moment.”
A three-bedroom near-new home for sale at 12 Shahkot Way, in Papatoetoe, Auckland. Photo / Supplied
Maynard said there were developers who were confident enough to continue building this year, hoping that by the time their townhouses were ready to sell in mid or late-2025 there would be better prices.
“It’s good news actually, people haven’t stopped building,” she said, adding that she is fielding calls from other developers wondering what they should do.
Some developers are already responding to the glut of homes on the market, and are modifying their builds, for example, by adding ensuites to every bedroom in order to stand out.
Maynard said another one of her listings at 2/49 Everglade Drive, Goodwood Heights, had done just that. The new-build property has four bedrooms, three bathrooms and a larger footprint.
“It costs just that little bit more to build, but they know they’re going to make more money out of it,” she said.
Harsimran Singh, owner of Harcourts Papatoetoe, said that the market had been challenging but recent activity suggested the outlook was improving.
“The developers didn’t sell off-the-plan, they’ve gone ahead and built and they’re struggling. But in the last four weeks, there has been some good activity,” he said. Townhouses that were looking for early $700,000s were now getting offers at $800,000.
A large four-bedroom town for sale at 2/49 Everglade Drive, Goodwood Heights, Auckland. Photo / Supplied
“Further east, we were marketing three-bedroom homes for $859,000. A lot of people came through and we’ve had good results. One of them sold unconditionally, and we’ve got offers on two others.
“I don’t think anyone is panicking, but I see about 40 properties that haven’t changed. They bought [land] at the peak and they’re waiting patiently. They’re new builds with off-street parking and internal access garaging and that’s unheard of with new builds now,” he said.
Singh said Papatoetoe had strong Indian and South Asian communities, and people wanted to stay in the area. “There’s definitely activity out there. We saw a substantial difference in April as opposed to the previous five or six months. And May continues to be consistently positive.
“We’re seeing unconditional offers on places – and not throwaway prices like last year.”
Harcourts Papatoetoe owner Harsimran Singh: "The developers didn’t sell off-the-plan, they’ve gone ahead and built and they’re struggling." Photo / Fiona Goodall
Lance Pemberton, branch manager of Barfoot & Thompson Papatoetoe, said there was still demand for existing, older homes in the suburb. “Some professionals will go for the new builds, but if you want to get on the property ladder and be able to add value, you go for the standalone homes,” he said.
He said young tradies were on the hunt for outdated family homes they can improve. “We’re at the bottom of the economic cycle, so what better time to get on the property ladder?”
Pemberton said that some developers were buying properties with density potential, but also wanted homes on them that were good enough to rent out while they finalised their plans.
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