Belinda Feek is a NZ Herald reporter

Frazzled buyers skip basic checks to nab a home

Photo / Getty
Photo / Getty

Auckland's halo effect on the property market is pushing first home buyers in the regions to the limit as they buy homes without first setting foot inside.

Real estate agents in the Waikato and Bay of Plenty have confirmed that there have been cases of first home buyers at their wits' end snapping up whatever they can to get their foot in the property door.

Tauranga Eves and Bayleys Real Estate chief executive Ross Stanway agreed it wasn't a common phenomenon but it was happening.

"I think it would be an exaggeration to say it's prevalent but it's not uncommon and in particular they would tend to be Auckland buyers buying an investment property here."

However, young first home buyers were also frustrated at being kept out of the market.

"I hope it's not an element of panic because that's risky, but without doubt it would be a symptom of sheer frustration and a willingness to take a higher degree of risk than would normally be the case in order to get a stake in the market."

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First home buyers would almost definitely need a mortgage which would then require them to get a registered valuation of the property which provided invaluable detail. "A condition of a mortgage, almost inevitably, is that a valuation is done and so that mitigates, to a certain extent, the risk of buying a property unseen.

"It doesn't remove the risk but it goes towards it."

Simon Lugton, of Lugton's Real Estate in Hamilton, said the majority of people buying sight unseen were mostly investors, including from Auckland, who didn't have time to drive down and look at the house.

But first home buyers and owner-occupiers or "movers" had also done it.

"It is something that is happening ... it happens at auction if you have multiple bidders and they miss out and there might be another one down the list they like, so they look at the brochure and go for that one."

Sources had told the Herald of two cases in the Waikato where a first home buyer had bought the house without walking through it or doing any due diligence first.

Mr Lugton described the Waikato market as "crazy".

Their latest auctions - held on Wednesday - saw most go "hugely" over their reserve.

He didn't expect the market to slow anytime before the end of the year due to imbalance of supply and demand.

Waikato mortgage specialist Wayne Oliver was yet to come across any first home buyers buying sight unseen.

"It's probably very much a trend that's developed since the market has been boiling like it has been lately, which is causing [property prices] to rise between $2000 and $3000 a week in Hamilton and Tauranga."

QV national spokesperson Andrea Rush said the first home buyers in the regions were finding themselves in a rapidly rising market in fear that they might not find a home.

"Buyers who have missed out before and have a fear of missing out on the next property might look to buy a property sight unseen ... this means that they don't go through the recommended procedures of doing full due diligence which would include a building inspection and getting a market valuation report."

Nick Goodall, of CoreLogic, said Auckland investors began taking a serious bite of the Hamilton property market in the third quarter of 2015, which resulted in 17 per cent of all sales, up from 5 to 6 per cent in previous years. The investors began eyeing up Tauranga in January and in the first quarter account for 10 per cent of all sales, up from 5 to 6 per cent in prior years.

He said first home buyers made up 25-30 per cent of sales in Wellington over the last few years, compared to 23 per cent in Hamilton, 22 per cent in Auckland and 16 per cent in Tauranga.

- NZ Herald

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