KEY POINTS:
A mini-boom is about to hit the property market, giving buyers a chance to bag bargains and make money as the market corrects.
That's the advice from Martin Evans, president of the New Zealand Property Investors Federation.
And, according to test-cricketer-turned-mortgage-broker Adam Parore, more deals are likely to
come on to the market as homeowners, who have enjoyed low fixed rates for years, have to contend with the current high interest rates.
The Herald on Sunday's search of Trade Me's property website found dozens of properties already going below valuation.
Evans said: "The values have dropped and people are becoming more realistic. The cycle has gone over the top and is on its way back down again."
Rising interest rates meant it was taking those selling homes more time to find buyers, who faced rates above 9 per cent. "Then people realise they have to drop their prices."
That's prompted a complete turnaround in the property market.
A year ago, Kiwi homebuyers made quick deals to beat rapidly rising prices.
Now, it's the other way around. Sellers are starting to feel that if they don't shift their properties quickly, they face losing money on the deal as prices continue to drop.
"Purchasers are in no hurry to buy a house," Evans said. "They know prices aren't going to go up - they will go down."
He expects prices to continue to drop, falling by between 5 per cent and 10 per cent of current values. The property pattern suggests that the values will drop too much - and enjoy a brief surge upwards as values stabilise.
That creates an opportunity for savvy buyers. And, said Evans, "there's a lot of people out there with money wanting to buy".
Parore said the Reserve Bank was having the greatest impact on the market by holding the official interest rate steady. It meant those who came into the market three to five years ago were enjoying interest rates in the high 6 per cent and low 7 per cent range. They were now facing re-mortgaging and coping with interest rates above 9 per cent.
"A lot of the sellers will also be highly geared, with mortgages of 90 per cent to 95 per cent (of the home's value)."
And the increase would have its greatest impact on those people. "A lot of these people will probably be on the same salaries."
It had seen not only homes selling below valuation but also an increase in the numbers of mortgagee sales.
Parore said the impact on homeowners would not be harsh - as long as the employment rate stayed the same. "If people start to lose their jobs there will be blood on the streets."