South Auckland developers failing to settle on house purchases

Developers and investors who bought at the peak of last year’s market may now be struggling to settle their purchases, a real estate chief has warned.

Tom Rawson, who co-owns the Ray White franchise that covers much of South Auckland, told OneRoof that an email from a developer’s lawyer last month tipped him off.

“We had an email from a lawyer in early January saying his client, who was due to settle in the coming months, would be unlikely to settle,” Rawson said.

“They wanted to cancel the sale and purchase agreement to give the vendors a chance to re-sell now, not wait until their agreed settlement day.

Rawson began digging into other sales, and the news was not good. A number of developers and investors who had bought properties with long settlement periods – between six and 12 months – looked as if they would no longer be able to complete their deals.

“We looked into all our settlements, some of which stretch to November this year. We’ve already got a couple we know of now that could have difficulties and we’re picking up early signs a few more settlements might not go through.”

He said those at risk of defaulting had said changes to the lending rules had a negative impact on their financial position.

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