BOGOF Tesla+house offer fails to excite New Zealand homebuyers

A BOGOF Tesla+house offer fails to excite New Zealand homebuyers.

A homeowner in New Zealand is offering a “free” Tesla to anyone who buys his house. The house – a seven-bedroom, five-bathroom monstrosity – has been on the market for weeks.

The Kiwi house price bubble is well-and-truly burst. Inflated prices fell more than 10% in October alone, the 11th consecutive month in a downward spiral. If the trend continues, houses in most parts of the country will be affordable to many more people.

That’s a good thing, isn’t it?

A Kiwibank economist recently stunned the world with the news that…

“Rising mortgage rates continue to weigh on house prices and sale activity,”

Desperate to sell, the owners of the extravagant pile in Flat Bush, an Auckland suburb, had already dropped the price, though clearly not by enough. In an attempt to do something to make the property stand out from the other 400+ listings in the Auckland suburb that everyone wants to leave, owners and agents came up with a bizarre gimmick.

An agent said…

“The price of the car is a ‘bonus’ rather than adding to the market value.”

But that might not be how tax authorities view the matter. The deal sounds more like a desperate scam than an incentive to buy. “I’ll take the money instead, thanks.”

After purchasing the property, the new owner will get to pick the car’s colour – the Tesla Model Y has five options. The car will then be ordered and shipped straight from the manufacturer.

It’s certainly a very strange offer. Why a Tesla? Why the Y? Why not a fishing boat or a year’s supply of oysters and champagne? Isn’t it easier to find a buyer for a cheap house than an expensive house plus a free car that you don’t want?

Is the owner is really saying…

“Buy my house and I will spend NZ$76,000 (1.7 million baht, US$47,000) on a car for you, that you don’t want?”

With room to park another five cars and a granny flat on the bottom floor, the new owners will have enough space to run and house an entire F1 team.

The NZ house-price bubble expanded by 40% over the pandemic before peaking last November at levels repeatedly described by the central bank as unsustainable. Even so, plenty of homeowners are unable to understand that their homes are worth what someone is prepared to pay for them, not a number under a picture in a real estate agent’s window.

To bring some sanity back to a bloated market the central bank has repeatedly raised interest rates, and prices have returned to more reasonable levels, but not enough to satisfy greedy owners who are convinced that they deserve to make huge profits for having done nothing more than endure lockdown in the property and gotten thoroughly sick of the place.

Many economists expect that with the cash rate forecast to go higher, a BOGOF Tesla+house offer will do nothing to help. House prices still have a lot further to fall.

As for the freebies? There is one surefire way to sell anything. No incentives will ever beat a fair price.