Entry-level homes in many of the major North Island cities are for sale at prices agents say are the lowest they’ve been in several years.
In Hamilton, buyers can find houses for under $600,000, while the price change has meant that homes in South Auckland for $700,000 are now a reality.
The average property value of the bottom 10% of homes in Auckland sits just below $750,000, according to analysis by OneRoof’s data partner, Valocity, while in Tauranga it’s $745,000, and just under $675,000 for Wellington and $575,000 for Hamilton.
Hamilton-based Lodge agent Blair Pointon said first-home buyers were like sheep and tended to follow investors even when there were some good deals to be had elsewhere. “I always find first-home buyers only want to buy when everybody else is buying,” he said.
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Pointon said a two-bedroom home in Hamilton could now be purchased for under $600,000 and a three-bedroom in the mid-$600,000s – which would have been unheard of last year during the market peak.
He is selling two properties that he feels are perfect entry level: a three-bedroom home on a 756sqm section at 3 Rutland Street, in Fairview Downs, which is priced at $699,000, almost $100,000 under the RV; and a three-bedroom, one bathroom house on a cross lease section on 111A Maeroa Road in Maeroa for $629,000.
111A Maeroa Road in Hamilton is selling under CV for $629,000. Photo / Supplied
“There’s a great opportunity for them [first home buyers] to buy at the moment. The banks are lessening their restrictions from what was happening late last year and earlier this year. I just think there are a lot of things that are in their favour at the moment, but because the market is flattening off, they feel like they’ve got all the time in the world. But I can tell you right now as soon as the market goes again, they are the first ones to start complaining.”
Ray White Papakura agent Anthony Russell said entry-level properties were becoming more affordable in his patch, with prices dropping to under $700,000.
Properties selling in the mid-$600,000 were often on cross leases, unit titles or required major renovations.
Russell recently sold a two-bedroom brick and tile do-up on Willis Street in Papakura under the hammer for $660,000. He also had another two-bedroom property on a unit title go under contract in the under-$700,000 price bracket. “Generally speaking, people still want to get into the market. First-home buyers and a lot of people are speaking about having up to $650,000 and now those sorts of buyers are beginning to find more,” he said.
Vendors who want top dollar were opting not to sell at the moment, but those who want the money for something else or their circumstances have changed were likely to sell. “Vendors can take a while to understand how the market has changed, but they have a choice – they can sell it at what the market price is or hold,” Russell said.
However, it can be a double-edged sword because while house prices might be more affordable, the tightening of lending rules means some people may not be able to borrow as much. Late last year, Russell had buyers whose bank changed the amount they would lend them from $675,000 to $625,000. “It had a huge impact,” he said.
A do-up on Willis St in Papakura, Auckland, recently sold at auction for $660,000. Photo / Supplied
“What’s happening is people’s pre-approvals are expiring and when they apply for a renewal it’s quite often less than their previous pre-approval.”
In East Auckland, Ray White Howick agent Marie Raos said a two-bedroom unit could be bought for high $800,000s to early $900,000s. “Last year it would be a million, a million for anything last year, virtually,” she said.
She advised house-hunters to buy now. “If people look at it long-term and they are first-home buyers, they are better to buy now and fix their interest rate than leave it six months and wait for a small drop and wait for the interest rates to go past the drop in value.”
A similar trend is happening in Wellington.
Tommy's Real Estate agent Jason Lange said in Wellington City a newer style one-bedroom apartment was now priced around $550,000, whereas last year it would have been about $600,000. Likewise, a two-bedroom townhouse had dropped from around the high $900,000 and to the low $900,000s. A three-bedroom, one-bathroom stand alone in Johnsonville would now be about $850,000 compared to $900,000 and $950,000 12 months ago.
A pedestrian passes a real estate office in Wellington. The bottom 10% of homes in Wellington now sit just below $675,000. Photo / Getty Images
“We are seeing reductions of 8% to 10% at the moment for that particular stock, but the issue first-home buyers have got is whilst property houses have come back a little bit ... debt servicing has also gone up almost double,“ he said. It was also not uncommon to see first-home buyers to move out of Wellington City to Lower Hutt and Upper Hutt to get more value.
Lange said good houses would always sell well no matter what the market was doing and his advice was to look at properties where they could add value with a lick of paint or new carpet.
Professionals Redcoats agent Stephen Lee said there was still strong demand for both high-end and two-bedroom homes in Eastbourne as people moved or expats returned from overseas and the older population downsized. “It’s the three-bedders where people thought they could make a massive gain on, that’s where you are seeing reductions and we are seeing like $50,000 a week down here at the moment,” he said.
Valocity head of research Wayne Shum said the latest analysis showed there had been some downward movement in property values at the bottom of the market.
“Generally, the market hasn’t moved much in the bottom 10 per centile compared to last year except for Tauranga where demand is pretty much still there.”
In Hamilton, it was possible to get a freestanding home in the bottom 10% although Shum said it probably wasn’t the case in Auckland because of its different property mix. Auckland’s lower-end captured about half of the CBD apartments, leaky homes, tiny units and government or council-owned properties.
“There will be bargains to be had coming up, but they are yet to translate to actual sales at this stage. Some sellers still need time to adjust to the expectation,” he said.
However, he expected the figures to show a further drop in four to six weeks once the recent sales figures filtered through. “You can get very cheap properties under $600,000 in Hamilton now, but even if you buy it tomorrow, it will probably be four to six weeks before you settle and that’s where it shows up in that data."
