As New Zealand’s housing market continues to plummet, the owners of one home have opted to throw in a free Tesla to try to entice buyers.
The advertisement for a newly built five-bedroom house and granny flat in Auckland is headlined “brand new Tesla and brand new home”.
New Zealand’s housing market has been dropping steadily for a year, with high mortgage rates scaring many prospective buyers away. Real Estate Institute (REINZ) data released this week shows that the median house price was down 10.9% annually, to $825,000. The overall volume of houses sold in October had also dropped dramatically: down 34.7% compared with last year, from 7,486 to 4,892.
Auckland’s median price dropped 12.7% from October 2021, to $1.09m. Properties were staying on the market for longer, REINZ said, with the national median stretching to 44 days in October, up 10 days from the year before.
The Auckland homeowners had been hoping to stand out in what has become an intensely competitive market, Barfoot & Thompson sales agent Kapil Rana told TVNZ, adding that the vehicle was a “bonus”, rather than an add-on to the market value. Tesla cars sell in New Zealand for about $72,400.
The Auckland property is on the market for offers around $1.8m – but it sits alongside more than 400 homes for sale in the suburb, many of which are likely be on the market for months. In this selling environment, tactics like the Tesla could become increasingly popular for sellers hoping to offload property quickly – and for estate agents trying to sweeten deals without driving area house prices down.
The fall in house prices and volumes has been primarily driven by the jump in interest rates - which New Zealand’s reserve bank has been raising to combat high inflation – driving up mortgage rates.
If mortgage rates stay high, many of New Zealand’s recent, highly leveraged buyers could be in trouble: those who fixed short term interest rates when buying at the market peak in 2020-21 when interest rates were low, are now facing the possibility of significantly increased mortgage repayments.
The reserve bank’s financial stability report, released this month, showed that if interest rates hit 7%, almost half of those who bought last year would need to spend 50% of their income on mortgage repayments.
