The owners of one New Zealand home are offering a free Tesla to potential buyers to boost interest in their property as the housing market continues to decline.
Brand new Tesla and brand new home: that’s the tagline for an ad for a five-bedroom property plus a granny apartment in Auckland.
High mortgage rates have scared away many would-be purchasers in New Zealand’s property market, contributing to a steady decline over the past year. The latest statistics from the Real Estate Institute of New Zealand (REINZ) reveal that the yearly drop in the median house price was 10.9%, to $825,000. Compared to October of the previous year, home sales were down 34.7%, from 7,486 to 4,892.
The median value of an Auckland home fell from $1.27m in October 2021 to $1.09m in the following year. According to REINZ, the median number of days a home stayed on the market increased by 10 days in October compared to the same month a year ago, reaching 44 days.
Auckland residents wanted to stand out in what has become a very competitive market, according to Barfoot & Thompson sales agent Kapil Rana, who told TVNZ that the car was more of a “bonus” than an “add-on” to the property’s worth. In New Zealand, the price of a Tesla automobile is around $72,400.
The Auckland home is listed for bids of $1.8 million, but only one of more than 400 properties is available in the area. In this market, sellers who want to move quickly, and real estate brokers who want to close transactions without bringing down local home values, may find incentives like the Tesla are more appealing.
Rising interest rates, which the New Zealand reserve bank has been doing to battle excessive inflation, constitute a significant factor in the decline in home prices and sales volumes.
Those who bought at the market top in 2020-21, when interest rates were low, and who fixed short-term interest rates now face the risk of drastically higher mortgage repayments if mortgage rates remain high.
According to the reserve bank’s recently issued financial stability assessment, over half of the individuals who bought in the previous year would need to spend 50% of their income on mortgage repayments if interest rates reached 7%.
