"[But] they sold for hundreds of thousands of dollars more than what I was prepared to pay because their condition was poor and they needed significant work.
"Others didn't have that knowledge, obviously didn't do their due diligence or were oblivious to the risk and have therefore paid well over the odds for these properties."
Mr Gray said he had been "horrified" by what people had been prepared to pay for buildings that needed significant work.
He said buyers feared missing out or simply could no longer afford to do due diligence.
Mr Gray said the trend was putting pressure on more vulnerable first-home buyers and young couples.
"They are being pressured by activity in the market to make rash decisions about their choice of home and of course being forced into a position where they are paying too much for these properties.
"[They] are then going to be left with a problem in having to deal with serious maintenance issues and in many cases serious defects which will require a lot of money."
Quotable Value (QV) statistics released yesterday showed Hamilton and Tauranga residential values were rising faster than those in Auckland.
Residential values in the City of Sails rose 16.5 per cent annually, but QV data showed Hamilton values up 25.3 per cent year on year to hit an average $471,072 and Tauranga City values up 21.5 per cent to hit $577,494.
Barfoot and Thompson this week reported its lowest April sales figures in four years. The agency sold only 944 properties last month, down 29.6 per cent on March and 11.8 per cent down on April last year.
Peter Thompson, the real estate agency's managing director, said the likely cause of this was caution surrounding current pricing and the low number of properties on the market.
Mr Gray said the drop was due in part to buyers not meeting vendors' expectations.
"The other thing of course is the availability of homes in the more affordable bracket. We have got so many people that we know of who are out there looking for a home but the prices are beyond their reach and they are sort of resigned to not entering the market now, if at all."
Mr Gray said the drop was evidence of the market going through a period of readjustment but whether or not it was going to be a sustained downturn was unclear.
Fire-gutted home sells for $1.55m
A 126-year-old Ponsonby property gutted by a fire which killed its owner sold for $1.55 million at auction yesterday.
The two-bedroom 1890 villa at 70 Brown St in the central Auckland suburb went up in flames in October last year. The sole resident, Valerie Gibson, 71, who had lived there for many years, died in the fire as did eight of her dogs.
Despite the extensive damage, the location - just minutes from the CBD - and size of the almost quarter-acre property attracted several potential buyers. Most people who looked at the property were interested in the land more than anything, said Barfoot and Thompson agent Paul Studman.
"We did have some people looking at the house with a view to restore, recreate or rebuild, but it was the location that attracted most."
The house sat on 404sq m of land and had a capital value of $1.37 million. It was bought for $210,000 in 1990 when it had a CV of $230,000 and 10 years earlier sold for $28,000, according to property records.
The property was a "blank canvas" for buyers who would be up for a creative project, read a Barfoot advertisement.
