First-home buyers resort to extreme measures to get into property market

First-home buyers are using extreme measures to buy property, including letterbox drops and door-knocking making cash offers.
First-home buyers are using extreme measures to buy property, including letterbox drops and door-knocking making cash offers. Photo credit: Getty.

First-home buyers are resorting to extreme measures to buy homes, using targeted letterbox drops, door-knocking with cash offers and trying to view properties before they're listed.  

Across New Zealand house price rises are in the double-digits - REINZ data shows the national median sale price rose over 20 percent year-on-year, reaching $780,000 in February. 

Auckland prices rose 24.3 percent year-on-year to $1.1 million, while prices in the capital city rose 24 percent, to $890,000. 

Cheap borrowing due to record-low interest rates has attracted property investors, while COVID-19 means homeowners are channeling money usually spent on international travel into upgrading their home. 

Increased demand combined with a listings shortage has made competition to buy a home even stronger. And some first-home buyers are resorting to targeted letterbox drops to get one.

As one example, a Newshub staff member living in central Auckland found a letter in their mailbox addressed to 'the homeowner'. It was from a couple keen to buy in the area and cut out the competition.

"Since returning from overseas, we have been searching but are yet to find the right place and really like the street you live on," the letter reads.

"So we thought we'd be proactive and contact you directly in case you were considering selling your home in the near future."

The letter goes on to appeal to the benefits of selling privately, such as saving money on real estate fees, not having to prepare the house for sale and no open homes.

"We are flexible on timings and would be happy to buy privately to save you agency fees and marketing costs, or through an agent if you'd prefer," the letter says.

"It would also save you preparing the house for sale, market viewings, etc."

The potential buyers also indicate they're realistic, saying they would offer a "fair market price". Contacted by Newshub, they did not wish to comment.

An excerpt from a letter from a first-home buyer received by an Auckland homeowner.
An excerpt from a letter from a first-home buyer received by an Auckland homeowner. Photo credit: Supplied.

An existing homeowner in Auckland told Newshub she'd used a similar method with some success. 

Seeing a vacant unit, she left a hand-written note under the doormat, explaining she owned a unit nearby and asked if the owner wanted to sell. She was surprised to receive a call back a few days' later.

"The owner said 'if you make us a really good offer - one we can't refuse', he and his family would consider it," the woman said. 

REINZ acting chief executive Wendy Alexander, said direct letterbox drops and door-knocking making cash offers to homeowners were among the alternative methods buyers were resorting to in the current market.

"It seems these types of methods are becoming more popular as the number of available properties has decreased...some of these letters or conversations include a personal CV, work history, family photos and information which aims to pull at the heartstrings," Alexander said.

First-home buyers were also approaching real estate agents directly, hoping to gain access to properties before they were listed, and/or before the first open home. Most of it appeared to be born out of "pure frustration" of repeatedly paying for due diligence (e.g. building inspections and valuations), and missing out.   

"With the total inventory available to potential purchasers down 24.2 percent on the same time last year, this has meant that there is less choice for those looking to either buy or move house.

"However, with loan-to-value ratios now reinstated, this will hopefully start to bring more stability to the market and things will start to return to 'normal'," Alexander added.  

Property commentator and economist Tony Alexander agrees that an extreme shortage of listings, rapid purchasing of properties and being repeatedly outbid at auctions were among the key frustrations of first-home buyers competing in the current market.

But it's important buyers don't let emotion and fear of missing out stop them from checking a property out first.

"Desperation can lead people to overlook still pays to get the property properly assessed before making an offer," Alexander said. 

Latest data from shows from March 1 to March 15, there were 6247 property listings, an increase of 2.7 percent compared to the same time last year. 

CoreLogic head of research Nick Goodall confirms currently around 87 percent of properties are sold through real estate agents, noting when house price growth is higher, private sales increase.

"When the market has been growing at a faster rate, we tend to see a greater share of properties sold privately...for example when annual value growth hovered around 13-14 percent throughout 2016, the share of sales done with an agent was around 83 percent," Goodall said.