Two South Auckland first-home buyers say it's been "heartbreaking" to watch as a property trader snapped up homes they tried to buy, and then immediately put them up for sale again for up to $100,000 more.
Garry Singh and Andrew Robins say the trader's actions are helping push sky-high Auckland house prices even higher at a time when homes are out of reach for many.
But Rickhil Prakash - a trader and director of South Auckland's Hills Real Estate – said he is not pushing prices up and is running a legitimate business because he risks making a loss if he can't resell the homes for higher prices.
Singh said he was the leading bidder for a Papakura home at a November 2 auction, having bid $870,000, before the auction went to a 15-minute recess and a new phone bidder suddenly emerged and paid $900,000.
Just days later, he saw the same home advertised on Facebook Marketplace by a Hills Real Estate agent for more than $1 million.
Similarly, Robins said he went to an auction for another Papakura home that sold on October 12 for $801,000, before it was relisted a day later by Hills Real Estate for $850,000.
He said other homes he saw sold were also relisted by Hills Real Estate within two days for prices more than $100,000 higher.
"It is heartbreaking when you find out that a house you are interested in is getting sold the next day for inflated prices," he said.
It comes as home ownership rates have been steadily declining in New Zealand and as Auckland's median house price hit a record high of $1.25 million in October, up 25 per cent from a year ago, according to the Real Estate Institute.
The city hit the new high despite having spent almost three months in Covid lockdown and the Government this year bringing in tougher tax laws aimed at discouraging investors and traders from buying more properties.
One prominent real estate agent, who asked not to be named, believed 30-40 per cent of all homes sold in South Auckland in recent months had been snapped up by traders, looking to "flip" them to new buyers for quick profits.
In 2019, the Herald on Sunday identified Prakash as one of the nation's top 10 most prolific property traders.
Then last year, Prakash started Hills Real Estate company, which specialises in selling South Auckland homes, and now has more than 50 agents and employees listed on its website.
Prakash denied his agency and property trading were pushing prices up.
He said he used a trading company to buy homes before listing them for sale with Hills Real Estate, which is a separate company.
He only bought homes from sellers selling with other real estate companies.
He never bought homes being sold by Hills Real Estate itself, he said.
"Everything is all legal, we are buying from outside companies, we're not buying from our vendors, we are buying from other agencies."
He paid all appropriate taxes and disclosed all relevant details when buying and selling homes, he said.
"So I am just buying as a normal buyer, and if I can sell it for more, I make profit," he said.
"But if the market changes, I can sell it for a loss and that will be my problem."
Sometimes the homes can take up to three years to resell, while other homes needed renovations or improvements to help them sell, he said.
When reselling homes, he said he set realistic prices. This was backed up by independent valuers, who provided valuations of the houses to banks before the banks lent money to the home's new buyers, Prakash said.
If the prices weren't reasonable, the banks wouldn't lend to the buyers, he said.
Hills Real Estate didn't just sell Prakash's homes. It also sold homes on behalf of regular sellers putting their family home on the market and on behalf of other property traders, he said.
Prakash also directly commented on three properties that first-home buyer Robins had been tracking.
That included 2/42 Sutton Crescent in Papakura, bought on October 12 for $801,000 and relisted on October 13 with Hills Real Estate for $850,000.
Prakash said he thought he was going to make a loss on the home because it hadn't sold yet and he was having trouble getting the price he wanted.
Another home at 2/10 Don Street, Papakura – bought on October 13 for $822,000 and relisted for sale with Hills Real Estate on October 15 for $899,000 – currently had interested buyers but also had not yet sold.
Another at 2/12 Percival Street in Manurewa – bought on October 5 for $745,000 and relisted for sale with Hills Real Estate on October 7 for $850,000 – also had interested buyers but had not yet sold.
Industry regulator the Real Estate Authority did not comment directly on questions about Hills Real Estate and Prakash.
Chief executive Belinda Moffat said there was nothing preventing a real estate agent from acting as a property investor or trader. Nor was flipping houses illegal, she said.
A real estate agent's primary responsibility was to get the best possible price for the person selling the house, Moffat said.
"For instance, if the licensee or someone related to them wants to put forward an offer on the vendor's property, the Real Estate Agents Act requires the licensee submit a form which seeks the vendor's consent to the licensee continuing to act for that vendor," she said.
Robins said he and his partner had saved close to a 20 per cent deposit for their first home, but it was impossible to continue saving enough to keep up with the market's "crazy price increases".
He claimed it was distasteful that traders were taking advantage of lower income areas, such as Papakura, Manurewa and Ōtara, where people are struggling financially and have now been hit by Covid.
"All of these people are trying to make a start on their futures and then you are seeing all these entry-level house prices go up and up," Robins said.
Buyers in Papakura are under pressure to come armed with budgets of $1m-plus, with the area's average property value rising 8 per cent ($85,000) in the last three months to $1.141m, according to the latest OneRoof-Valocity house price figures.
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