KEY POINTS:
Real estate agents say the magic number is 20 per cent: motivated home owners who slash their asking price by that number can defy the property downturn and have offers flooding in.
Better still, agents are advising sellers to remove the asking price from advertisements or rely on an auction to set the price.
Average property prices have dropped only 8 per cent from a November 2007 peak. But reluctant buyers are demanding far more substantial cuts to prices.
Min Sarginson, from Min Sarginson Real Estate in Canterbury, said that tipping point was 20 per cent.
"Across the board, we're looking at asking vendors to drop 20 per cent to get the offers flooding in. Other real estate agents around the country are also suggesting vendors drop 12 to 20 per cent."
She said industry sales figures, showing a 5-7 per cent drop in prices, understated the real price cut needed to attract buyers. Buyers who have cash to spend are trying to anticipate how far the market will drop - and, if they can't get those prices now, they're willing to wait.
This week, her agency received four phone calls immediately after dropping the asking price on a Lyttelton Harbour section from $100,000 to $88,000.
She also sold a three-bedroom villa overlooking Governor's Bay for $775,000 after the vendor dropped the asking price from $1.2 million to $1 million.
In Auckland, described by one agent as "an economy of its own", vendors may have to drop the asking price by only 10 per cent.
LJ Hooker general manager Keith Niederer said: "It's no good dropping it $5000. If you're not going to remove the price entirely, you're going to have to do some soul-searching. And then, if you've got a $400,000 house in Auckland, you're going to have to drop it something like 10 per cent."
Peter Thompson, managing director of Barfoot and Thompson, said a drop of 5 to 10 per cent on a seller's ideal asking price could make all the difference.
Sellers needed to be realistic: "Sometimes they do need to lower their expectations."
John Ross, owner of Professionals Hutt City, said vendors needed to lower their asking price to anticipate the falling market, rather than following the market down belatedly.
Those who lowered their asking price substantially when they put their home on the market would get a great deal of interest, whereas those who dropped it incrementally might never reach the tipping point that attracted offers.
Harcourts NZ chief executive Bryan Thomson said more sellers were lowering their expectations and they were getting results. "In contrast, sellers who refuse to recognise or accept the changed environment continue to languish," he said.
One Kingsland vendor dropped the price of her bungalow by $10,000 to $549,000 last week. The agent, Vincent Barnao of Anne Duncan Real Estate, said he had already seen the difference in open home attendance.
Barnao said the price drop was motivated by the vendor's need to sell and the work needed on the property.
"There are a lot of buyers out there but they are all looking for bargains."
But Barfoots agent Kymm Hape said auctions were the ideal way to sell.
One property on his books, a three-bedroom home on Momona Rd in Epsom, had been on the market for a year. Now, an extensive campaign promoting its auction was seeing buyers "coming out of the woodwork".
QV SHEDS 52 JOBS
New Zealand's biggest valuation and property information company has shed 52 jobs in the last year, mostly because of the market slump.
The chief executive of state-owned-enterprise Quotable Value, Bill Osborne, says 29 staff - 11 of them frontline - were not replaced in the 2008/09 financial year and 23 were made redundant.
The cuts follow 16 non-replacements and four redundancies in 2007/08, Osborne says. Half the jobs lost have been valuer positions.
QV employs 256 fulltime equivalent staff.
Osborne said he hoped there would be no further job losses because QV believed the dive in property sales had bottomed out.
QV will release its half-year financial report next month. It recorded a pre-tax profit of $18 million in 2007/08.
- Andrea Fox
