Increased buyer demand combined with a four-year low in the number of houses for sale is creating fierce competition between those wanting to snap up a share of the real estate market.
The sluggish number of house listings is failing to meet buyer demand, with homes for sale in New Zealand's three largest cities falling to their lowest level in four years, according to data released today by property website Realestate.co.nz.
The monthly report revealed just over 8500 new listings came on to the market in January 2012 - up only 3 per cent from the 8300 listed in the same month the previous year.
However, sales were up 22 per cent, said the report.
The situation has caused frustration and strong competition between buyers wanting to get into the market.
Aucklanders Lauren and Andy Worsley have been shocked at the number of people turning up to open homes and making offers on properties.
The couple have been looking for a home for themselves and 2-year-old son Sean since selling their Half Moon Bay home in October to move closer to Andy's work in the city.
They are willing to pay up to about $950,000 for a 3-4 bedroom house with a backyard and good school zone, but the number of competing buyers made it almost impossible, said Mrs Worsley, 34.
"We've lowered our standards so much over time but every time we like something there's always a million other people.
"It's very demoralising,'' she said.
They are selling their car and borrowing money from their parents to boost their finances and also have their lawyer on stand-by so they can act quickly when they find a house they like.
Most weekends are spent trawling open homes, and although they have found suitable properties, they have lost out on several places because of competing offers.
"It's almost like you've got to pay $50,000 more just to get it.''
They family have to move out of their home on March 1 and if they haven't found a place to buy by then, will have to look for a rental or live with family in the short-term.
While January was always a slow month for new listings, strong sales in the main centres have pushed demand far ahead of supply, leading to the record low levels of inventory, said Realestate.co.nz chief executive Alistair Helm.
The trend meant showed sellers continued to have the upper hand in the market, said Mr Helm.
"Everything's really selling because there's a good market and there isn't the selection out there.''
He said seasonal factors and a reluctance from house owners to put their properties on the market over the Christmas period had contributed to the sluggish listings.
"It (listing activity) lags behind the sale activity and that's why we're in the situation we're in.''
Agents were reporting up to 40 people turning up to open homes and several bidders competing in auctions, said Mr Helm.
"We've had reports of auctions with five serious bidders and quite aggressively bidding for a property.''
Barfoot and Thompson Grey Lynn branch manager Andrew Cosgrave had also seen an increase in demand as buyers tried to secure a property in the popular suburb and surrounding areas.
"It's not unusual to have 40-plus buyers through open homes in Grey Lynn, Westmere and Ponsonby. There is increasing demand across the board,'' he said.
A villa in need of a do-up in a sought-after area could command more than $800,000.
And for a renovated villa in good condition with four-bedrooms, off-street parking, garage, two living areas, and a garden big enough for the kids to play in - for many the ideal home - you were looking at close to $2 million, said Mr Cosgrave.
Many owners were reluctant to put their house on the market because they knew there weren't a lot of properties on the market and were afraid they wouldn't be able to find what they wanted, he said.
In Christchurch the number of houses for sale continued to be affected by the earthquakes, but buyer demand remained high, said Harcourts Christchurch business development manager Chris Kennedy.
"We're 10-12 per cent down on our listing stock _ demand is strong,'' he said,.
Up to seven offers on a property and fierce bidding at auctions weren't unusual as buyers competed for a purchase, he said.
"That's all driven by red zone people being paid out.''
Mr Helm advised buyers to compromise where possible to help secure a property.
"Open the area (where you're looking) to include other suburbs, settle for a smaller house or increase your budget. You can't make houses come onto the market.''
However, it wasn't all doom and gloom for buyers, said the report.
The average asking price remained steady, down 1 per cent to $417,740, showing sellers were not stretching prices expectations of buyers, said Mr Helm.