First home-buyer snaps up home below valuation in private sale

Private sale sign
The couple saw the private sale sign by chance after leaving a third open home. Photo credit: Supplied.

A couple who snapped up their first home privately for less than the current valuation say without competition from other buyers, they don't feel ripped off.

It comes as property prices are still rising despite the Government's efforts to cool the market and the Reserve Bank outlook that the drivers of house price growth will "come to a grinding halt" and "go sideways" for some time, its May Monetary Policy Statement forecasting annual growth to slow from 21.5 percent in 2021 to 2.6 percent in 2023. 

Current QV figures show nationwide, the average property value is $913,209, up 8.9 percent in three months. figures show average asking prices went backwards in 10 out of 19 regions in April and May, but it's "too early to tell if prices are starting to trend downwards", spokesperson Vanessa Williams said.

For Cantabrian Anna and her partner, an afternoon feeling defeated after looking at three "pretty bad and crowded" open homes turned to one of hope after they spotted a private sale sign for a house down a long driveway. 

"I think we were lucky to see the house when we did as the sign had only been up for four days - if it had been there longer, someone else would've probably snapped it up," Anna told Newshub.

Figuring they had nothing to lose, they called the number on the sign. The couple are now proud owners of a three-bedroom home on 862 square-metres of land in Woodend in North Canterbury. 

They paid the seller's fixed asking price of $519,000 which, having looked up recent sales, the couple say they were happy with and describe negotiations as "straightforward".

"What's most important is that we're happy with the price and don't feel ripped off in comparison to prices of the other houses we looked at...I'm convinced the house would've sold for a lot more if it had been listed through an agent," Anna said. 

Not having competition from other buyers helped, the couple said, as it meant people "weren't going crazy trying to outbid each other". 

"We needed to get a valuation report done as it was a private sale and the valuation came back above purchase price - without taking the emotions of the market into consideration," Anna explained.

The couple, who only became New Zealand residents early this year, weren't able to use KiwiSaver or the First Home Grant, towards their deposit. Their deposit of $105,000 took them around two years to save and included a small inheritance.

Initially motivated to buy a first home, after a few months of looking, the couple said like many first home-buyers, they "felt a bit hopeless" and were "tempted to give up".  A mix of luck and perseverance eventually got them onto the property ladder.

"Even if offers fall through and someone else's is accepted...don't lose hope [as] it only means one less competitor out there," Anna said.

CoreLogic March 2021 estimates show around 87 percent of properties are sold through a real estate agent. Head of research Nick Goodall noted during periods of higher price growth there appeared to be more properties sold privately, indicating some vendors may have taken the view they don't need an agent to get a good price.

REINZ April figures show the median sale price for Canterbury is $566,000, a 22 percent increase year-on-year ($590,000 for Christchurch city, up 30 percent year-on-year). Median selling prices in the Canterbury region are the fourth-lowest of 16 regions, with the Auckland region the highest at $1.125m (up 21.6 percent year-on-year) and the West Coast region the lowest at $275,000 (up 27.9 percent year-on-year).  

REINZ acting chief executive Wendy Alexander said although first home-buyers are still active in the market, many are taking a 'wait and see' approach following the Government housing announcement and reintroduction of loan-to-value ratio (LVR) restrictions.

"The increase in residential property prices over the last 12 months is also causing first time buyers to just take stock of the market, and assess their options - particularly as there was no increase to the first home loan and grant thresholds in the March 23 announcement for Christchurch City," Alexander said.

More than a decade on from the February 2011 Christchurch earthquakes, REINZ said with the passing of time, potential buyers don't appear to be shying away from the risk. But as with buying any property, buyers in Christchurch are urged to do their homework.

"However, what is important is undertaking the appropriate level of due diligence and ensuring that potential buyers understand the scope of works and insurance requirements locally; that's just part and parcel of buying and selling real estate in Christchurch now," Alexander said.