Welcome to this week’s Eagle Eye Property Insights, where our very own Graeme Eagle provides expert analysis and practical advice on navigating the ever-changing New Zealand property market.
At present, the New Zealand property market has the highest number of listings in 10 years, and properties in some price brackets are taking longer to sell. If you have a property that has been on the market for more than a month, most real estate agents will likely suggest a price reduction. However, there are other strategies to consider, such as changing the pricing method, ensuring your property is well-presented for open homes, reviewing the timing and days of open homes, increasing social media advertising, reorganising or taking new photos, and rewording the advertisement.
I have personally owned leasehold properties in the past and recently considered making an offer on one. Why didn’t I? While the price and rental returns may look attractive, there is always more to the story. Most people are aware that when the lease term expires, the ground rent can increase significantly to reflect the latest land value. Another reason people avoid leasehold properties is the difficulty in obtaining finance - if you can secure a loan, the term will only cover the remaining lease period. You must also factor in the cost of ground rent, as you only own the building. For me, resale value was the deciding factor. It’s not uncommon for some leasehold properties to sit on the market for 6 to 12 months.
I recently learned that some banks are offering cashbacks to customers to encourage them to stay - something I wasn’t previously aware of. Banks typically provide cashbacks to cover solicitor costs when purchasing a property, but they can also be used as incentives to retain existing customers and grow a bank’s loan book. While cashbacks may seem appealing, be sure to read the fine print. There may be clawbacks on previous cashbacks from another bank if you refinance. Additionally, mortgage brokers can face commission clawbacks, which may be passed on to you as the customer.
Note: The above comments are for general information purposes only and do not constitute financial advice. We recommend consulting a registered financial advisor when considering your mortgage options.