Houses under construction. Photo: RNZ / Todd Niall
Developers are offering sweeteners to prospective buyers in the current sluggish real estate market.
Mortgage broker Vijay Gounder has seen plenty of incentives for new build properties being offered to his clients.
He said simply discounting properties could pull down values for nearby homes in the same subdivision, whereas something like a cash back after purchase wouldn't.
"The subsidy is a great way for them to protect the value of the property, but also give the discount and incentive to the buyer. It's kind of a win-win for both of them."
Gounder said in a soft market, some developers would rather get homes sold than have them sitting empty, especially because easier loan-to-value ratio lending rules define a new build as no older than six months and bought direct from the developer.
"When it comes up to the six months mark, then you see developers start to, I guess, panic and start offering these crazy incentives to make sure that those properties are sold because obviously they're holding costs as well."
Fletcher Living announced in July, it will offer a $10,000 grant toward deposits for people who buy the company's homes in Auckland or Canterbury.
But it's not alone - developer Jalcon was marketing a subsidy for interest rates for apartments in its Owairaka Collection earlier this year, Avant Group is offering interest rate subsidies or grants for move in costs for its developments in the Auckland suburbs of Mt Roskill and Wiri, and CETA Homes is offering a cash back deal for some of its properties.
CETA Homes director Jason Donnelly said his company isn't offering incentives because they're desperate, it has always worked to get first home buyers through the door.
"Initially when [Kāinga Ora] was offering that shared equity scheme or the Home Start Grant we would point them in that direction if they didn't know about it. We might offer a cash back for them. Or we might be able to offer a range of other things, whether that's trying to partner with other shared equity groups out there, the Housing Foundation or You Own or just even competitive mortgage rates through potentially some better mortgage brokers."
Donnelly admitted it's a tough time to buy a property now, with the loss of the First Home Grant and general economic malaise thanks to high interest rates and job losses.
"When you haven't done something before doing it for the first time, it's quite daunting, especially when there's a lot of negative pressure out there."
CoreLogic chief property economist Kelvin Davidson has been watching for new construction and said it's quieter than it used to be.
"At the peak of construction we had about 51,000 new dwelling consents on an annual basis. Now the latest number on that has come down to, I think, less than 35,000. So, you have seen quite a big fall in construction activity."
Davidson said new builds aren't the only option.
"If you can find something there, you probably don't necessarily need to look at a new build. You might choose to get the equivalent existing property.
"You can probably put in a cheeky offer and it might get accepted because it is a buyer's market. So yeah, the the new build sector is in a downturn at the moment."
There could be relief on the horizon for the housing market, with economists predicting the Reserve Bank could drop interest rates when it reviews the OCR on 14 August.
Editor's note: Katie Fitzgerald received an incentive from the developer when she bought her home.
