Thu. Nov 24th, 2022

As New Zealand’s property market continues to plummet, one homeowner has decided to give away a free Tesla to attract buyers.

An ad for a newly built five-bedroom house and granny flat in Auckland is headlined “a brand new Tesla and a brand new home”.

New Zealand’s housing market has been in a steady decline for a year, with high mortgage rates driving away many potential buyers. Real Estate Institute (REINZ) data released this week showed the median house price fell 10.9% year-on-year to $825,000. The total amount of homes sold in October also fell dramatically: a drop of 34.7% compared to last year, from 7,486 to 4,892.

Auckland’s median price fell 12.7% from October 2021 to $1.09 million. Properties stayed on the market longer, REINZ said, with the national median stretching to 44 days in October, 10 days more than a year earlier.

Auckland homeowners were hoping to stand out in a market that has become intensely competitive, Barfoot & Thompson sales agent Kapil Rana told TVNZ, adding the vehicle was a “bonus” rather than an addition to market value. Tesla cars are sold in New Zealand for around $72,400.

The Auckland property is on the market for around $1.8 million – but sits alongside more than 400 homes for sale in the suburb, many of which are likely to be on the market for months. In this sales environment, Tesla-like tactics could become increasingly popular for sellers hoping to offload property quickly — and for real estate agents trying to sweeten offers without home prices in the area falling.

The fall in property prices and volumes was primarily driven by a jump in interest rates – raised by New Zealand’s Reserve Bank to combat high inflation – which pushed up mortgage rates.

If mortgage rates remain high, many of New Zealand’s recent highly leveraged buyers could be in trouble: those who locked in short-term interest rates when buying at the peak of the 2020-21 market. when interest rates were low, they now face the possibility of significantly increased mortgage payments.

The Reserve Bank’s Financial Stability Report, published this month, found that if interest rates hit 7%, almost half of those who bought last year would have to spend 50% of their income on mortgage payments.