KEY POINTS:
A surge in house-buying last week has prompted warnings that first-home buyers holding out for a bargain should get in before they miss out.
This follows predictions major banks will lower interest rates and the official cash rate may fall by September. Kiwibank was the first to lower its two-year mortgage rate below 9 per cent, announcing on Friday a drop from 9.29 to 8.99 per cent, and sparking speculation that its competitors will follow suit.
Peter Thompson, director of Barfoot & Thompson, says Wednesday's auction room was busy and properties fetched prices above the reserve. "People are starting to think, 'is it the time to start buying or not', rather than 'don't even look'."
Real estate agents contacted by the Herald on Sunday expect sales to climb over winter. They recommend first-home buyers start hunting for good deals now as they will be closely tailed by investors lured out of hiding by sliding interest rates.
Agents in some of Auckland's wealthy areas say sales volumes have fallen by as much as 50 per cent in recent months and prices are down about 5 per cent. Some believe media headlines have exacerbated what was initially a natural downturn in the real estate cycle.
But Don Ha, director of Don Ha Real Estate, Ray White Manukau, says by adapting its focus, his agency has stayed busy during the slump.
Prices have dropped, he says, as people struggling with finances have got rid of property. Ha has so far recorded 25 sales for May, and some of his agents are busier now than this time last year, he says.
"Now is a great opportunity for people who couldn't buy a home to buy, but if the market changes, they could miss that opportunity and investors will beat them," says Ha.
"In a busy market, investors beat first-home buyers almost five-to-one, they buy without seeing."
Ha's recommendation for sellers and buyers? "If they are in a hurry, they need to think of the minimum price they will accept, and have to be honest with their agent.
"If looking to buy, they have to look and make sure it's a house they want and they can re-sell. They need to get their finance pre-approved."
Neil Baker, director and general manager of Ray White Eastern group working around Bucklands Beach, says vendors and agents need to understand high prices of last August "won't be seen again for several years".
Prices at the eastern offices are down 12-15 per cent from August and 5 per cent over the past couple of months, Baker says, but May sales are up on previous months.
Baker says headlines have affected the market, but all the signs of the downturn are there regardless of what the media says. "My recommendation is to get in and negotiate before lower interest rates bring out other buyers."
Remuera agent Steve Koerber, of Barfoot & Thompson, says the only people selling in Remuera are those who have to - and the same is true of buyers.
"A lot of people are getting so much advice, and people they know they are thinking, 'gosh, why would you buy now when it's going to fall further'." Koerber says there is the odd case of a property selling for a price it would have reached six months ago but most prices are down between 5 and 10 per cent.
He partly blames media headlines for some of the slump. "It's a contributing factor. We are going to correct too far on the downside because of the negativity that has spread."
Tony Ebert, owner of Milford Real Estate, says sales volumes on the North Shore are down by more than half, because vendors are not selling under pressure, but prices have held up. That is because the North Shore has held its desirability, he says.
Ebert predicts sales will pick up in spring. Despite being about 20,000 transactions down since January, his company has noticed sales and interest increased last week.
"I think the interest rate drops in the past week and the Reserve Bank saying it will reduce the cash figure in September is a signal that things may be starting to return to normal."
