House prices slashed to seal deals

More sellers are chopping thousands of dollars off their listing prices to break a stand-off in the Tauranga housing market.
Some homes have sat unsold for a year or longer, and the market had stalled because of the big gap in price expectation between buyer and seller.
In the top end, especially in downtown Mount Maunganui, sellers have reduced their prices by more than $100,000 to move their houses.
John O'Donnell, principal of L. J. Hooker Mt Maunganui and Papamoa, said some vendors wanted the same price they paid three years ago at the peak of the market but it had fallen 10-15 per cent since then.
"If they seriously want to sell and get on with their lives, then they [usually] have to drop their prices. If they want their money back, then they may be waiting a number of years," he said.
Mr O'Donnell said a rule of thumb was that if a house had not sold within three months of listing, then it was clearly priced too high.
Shayne Donovan-Grammer, a valuer at QV Valuations in Tauranga, said people would do anything to avoid a loss.
"Some will hang on hoping the market will correct itself; they are playing bluff.
"Owners find it hard to value their own home because they have an emotional attachment to it. There is so much property information out there now and most people have a fair idea of what a house is worth."
Mr Donovan-Grammer confirmed that most sales were taking place at rateable capital valuation (CV) and below. Those selling above the July 2009 CV were renovated houses not yet re-valued for rating purposes.
Last month sales in the Tauranga market drifted to the lowest levels seen in the past 15 years. Just 44 houses changed hands at Mount Maunganui and Papamoa in January, and only 66 for the rest of the city.
But it was the summer holiday break, and real estate bosses are reporting a pick up in activity. One firm said it sold more houses in the first 10 days of February than in the whole of January.
Gil Beadle, spokesman for Bayleys and Eves Realty, said there was more realism in the marketplace.
"It comes down to the motivation for selling. If you bought three years ago, then you are facing an actual capital decline.
"If you bought later than that, then you are not going backwards because you are buying and selling in a similar market," he said.
"Buyers in the market today are not going to purchase unless the property is absolutely right for them, and they are not inclined to compromise. Buyers aren't enjoying it, either.
"The number of listings are lower because the sales volume is down and they don't have the same choice as in the heyday," Mr Beadle said.
Max Martin, franchise owner of Harcourts Advantage Realty, also noticed a change in vendors' attitude.
"They've come to realise they won't get the same price as three years ago. It's taken them a while to come round to this," he said. "But the market has shifted and if a house is priced right, then it will sell. The market is moving because of it.
"The sellers who need to move and the buyers who need a home to live in are now coming together."
A modern three-bedroom home in Otumoetai finally attracted an offer after nine months when the owner reduced the price to $395,000 (CV $460,000) after starting out at $485,000.
"It was like Grand Central railway station," said the owner, after his price went below $400,000. "I'll just take a cut and run."
Two houses in downtown Mount Maunganui sold after sitting on the market for two years, when the prices were reduced by $130,000 and $120,000. They were listed at $850,000 and $900,000.
Another home at Mount Maunganui had an offer of $825,000 two years ago and it was turned down. The property (CV $675,000) remained unsold, and the owner has just accepted a new offer of $610,000.
A brick and tile house in Matua has been on the market for nearly four years, and the owners are looking for a price above the CV of $775,000.
A 1980s house taking up most of the subdivided section in Devonport Rd had an asking price of $475,000, well above the CV of $381,000, and an unconditional offer of $360,000 was deemed not enough.
Mr Donovan-Grammer said the market was also slowed by the high debt levels of households.