Are you one of those types that look at the real estate windows when on holiday?
I had a interesting wine with an Australian couple who fell in love with Queenstown and decided that a holiday home would cement their new NZ relationship.
Armed with no local property market knowledge they did the window shopping research. They decided that with the frequent flights from Australia to Queenstown, and in their case, Sydney, Queenstown was as accessible as Cairns or Noosa and property prices had the added attraction of being quoted in NZ dollars.
The day after the decision to purchase and after much window shopping they made the important step… to step inside a real estate office and talk to an agent.
To cut a long story short they got the grand tour of properties available and decided on a apartment that also offered a rental return while not in use by the owners. The rental yield was extremely attractive and offered a two year rental guarantee by the developer.
That was six months ago and the developer has since gone bankrupt, the apartments that have not sold are currently being marketed for 30% less than the original prices. Owners that wish to resell their investment apartments have to compete with the mortgagee sales and be prepared to take at least a 30% loss in capital value.
The guarantee rental yield was not worth the price of the paper that it was written on and the agreed monthly rental cheques never arrived.
On reflection the Australian couple in question felt they did not do enough market research and was to trusting of the real estate agent.
The premier holiday destinations in New Zealand have more real estate agents per head of population than the large cities. Their favourite hunting time is during the holiday rush period when most city real estate offices are at there quietest. Don’t be surprised to be accosted by an agent when you are simply looking at their window from the street side. They are extremely aggressive.
As Real estate agents in New Zealand work for both the seller and the buyer, their only motivation is for the sales commission.
You will be told the usual lies that centre around the scenario that demand is outstripping supply.
A common ploy with developers is misrepresenting the number of apartments or sections/blocks of land that have been sold. Often you will be shown a site plan that is littered with little red sold stickers. These presale stickers are more often not sales at market value.
In the case of new land subdivisions, these may be sites that the developer is keeping to build spec houses or sites that have been heavily discounted to builders for the same.
In the case of apartment pre sales, the sold properties are often payments to financiers of the development. Often mezzanine financiers take an equity stake in the development that can result in those little red sold stickers.