'Losing hope': Prices put off would-be house buyers

This home in Kinmont has attracted about 15 sign-ins with several pending offers after only four days on the market. Photo: Brent Melville
This home in Kinmont has attracted about 15 sign-ins with several pending offers after only four days on the market. Photo: Brent Melville
Spiralling house prices in Dunedin are at crisis level, de-motivating first-home and other buyers.

With residential prices in the city up about $90,000 on average over the past year, first-home and other buyers are struggling to get into a home altogether.

Kath Cole, who was hoping to downsize from her five-bedroom Helensburgh home of 20 years, said after a year of looking, they were considering relocating to Christchurch, where you could ‘‘get the same size home for substantially less’’.

‘‘Prices are getting into the ridiculous category and there does not seem to be any middle ground, with houses in the too-high price or needing substantial work, which we are not interested in,’’ she said.

The attitude was shared by a first-home buyer, who had attended an auction in Mosgiel on Tuesday night for a home that sold for just under $600,000 — about 10% higher than estimated.

She said the starting bid was fairly close to her final limit so it was ‘‘devastating’’ to walk away from that.

Another young buyer who had sold her Fairfield home a year prior said she was ‘‘losing hope’’ of getting back on to the property ladder.

LJ Hooker Mosgiel agent George Molloy said the Taieri market as a whole had tightened considerably over the past few years.

‘‘That has seen quality properties in the area moving very fast, so it was fairly common to get a few offers at the first open home,’’ he said.

Mrs Cole said it had got to the stage where agents were contacting her to give her ‘‘sneak previews’’ of properties before they were formally on the market.

Mortgage Link mortgage and insurance specialist Liam Thomas said the multi-offer scenario was making it very difficult for buyers who were already facing tough lending conditions.

He said borrowers could resort to non-traditional bank lenders.

‘‘The rates are a little higher and the lending comes with fees, but is a solution to anyone with a low deposit or who has bad credit.’’

Where it became an issue, he said, was when people were walking into the office with an unconditional sale and purchase agreement before they had even been interviewed before the finance application.

The available stock issue also extended into the rental market, which was at ‘‘crisis point’’, Harcourts business manager Sarah Warhurst said.

‘‘Renters have been affected by several factors, such as first-home buyers purchasing stock that would otherwise have been purchased by investors or investors selling off stock to benefit from the increased sales prices.

‘‘The increase in compliance and insurance costs was also putting investors off holding rental properties, so it was becoming difficult for investors to find properties with viable yields.’’

Ms Warhurst said listed rentals would typically attract 10 to 15 interested groups.

‘‘Every time we accept a group or family for a property, we decline several other suitable tenants, which is concerning because there does not appear to be enough stock in the market to meet the demand, particularly in the rental range of $350-$450 per week.’’



The Market needs correction. Apparently, it does, or does not, according to 'Forces'.

Dunedin is attractive for a number of reasons, one, being the views experienced by 70% of the houses here. You just don't get that anywhere else except for possibly Wellington, but without the gale force winds! Kath, you may be right, Chch may offer a same sized house for a lower price, but remember, the risks of earthquakes and the lack of views coupled with the colder winters there, Dunedin comes out on top again. We too looked all over NZ and parts of Australia as we thought about a change, but Dunedin is VERY hard to beat. I wish to finish this comment by stating that Dunedin weather is terrible, people are unfriendly and there are no job prospects, so for those of you in other places thinking of moving to Dunedin, best to look elsewhere, it's terrible here, just terrible. We do have a fantastic council though. The services and infrastructure are second to none.

Its never been easy to purchase property. In 1990 I bought my first home. I earned 18k per year and the below average 1960s home cost $75,500. You are probably thinking "oh my god thats sooooo affordable!.....but wait my home loan interest rate was.......13.25%!!!!!!!!!!!!!!!!!.

Easy, cheap money to hook us on sky rocketing debt. 25-30 year mortgages, lovely....the age of financial slavery where 50% of your after tax income goes to the bankers.

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