Developers say buyers can now save up to $350,000 on these luxury Auckland apartments after slashing prices. Photo / Supplied

A pair of luxury inner Auckland townhouses have had between $230,000 and $350,000 slashed from their pre-construction sale prices as a number of developers battle to finish projects amid falling house prices.

Developers behind the Westmere project on Tirotai Cres are building "eight classy, contemporary modern townhouses", just a minute's walk from the suburb's "picturesque waterfront".

And - for a "limited time" - prices for two of the townhouses have been cut from $2.1m to $1.75m and from $2.45m to $2.2m, respectively.

The developer did not say in its advertisements why it had discounted the townhouses so heavily.

However, David Findlay, who owns Harcourts Real Estate offices in St Heliers and Mt Albert, estimated just one in three developers were getting projects off the ground at the moment.

This was because of a drop in demand for off-the-plan new-build homes as many buyers preferred to wait for house prices to fall and interest rate rises to ease, he said.

That was forcing some developers to drop prices in a bid to secure pre-sales before construction.

"Across the board, I don't think any developer is able to hide from the market reality and for a lot of them, it is about making sure they can complete the projects," Findlay said.

Auckland house prices skyrocketed during the first two years of the Covid-19 pandemic, but fell sharply in the past six months.

Auckland's average house price is now $1.47m - or $61,000 lower than three months ago, according to analysts Valocity.

In Westmere, the average price is now $2.75m - or $272,000 lower than at the start of this year.

Many pundits are expecting further price falls still as the market is buffeted by rising interest rates that are now the highest since 2015, rising inflation, talks of global recession and a net migration outflow.

That meant it made sense for nervous new-build buyers to prefer to buy homes in projects close to completion rather than ones 12 months away, especially with news of some developments falling over, Findlay said.

"Anyone who was buying off the plans before was buying believing they would make capital gains over the year it took their home to be built," he said.

"Now if they buy and wait a year, the price is going to be cheaper - so why would they buy early?"

Findlay said most big developers were able to cope with the drop in demand by building their projects in stages.

"Those developers are probably only going to complete half the projects in their estimated time frames, the other half will either be sold or held until the next market swing," he said.

However, some smaller, first-time developers were struggling.

While a few years ago it had been trendy for people to call themselves entrepreneurs, "last year the buzz word was developer", Findlay said.

"Every second person I spoke to was claiming they were a developer and yet they'd never done it before," he said.

Some new developers leaped in to capitalise on skyrocketing house prices, but overpaid for their land.

"For those guys that have bought the land, they've got no other options in many cases," he said.

"If they sell the land without doing the project they're definitely running at a loss, but if they do the project they can do it for a much slimmer margin or even just break even."

Findlay said his team at Harcourts had "a lot of smaller developers" looking to use the company's joint venture arm to help them complete their projects while others were simply looking to sell their land at a loss.

Most developers did have wriggle room, however, after some were making big profits during the past two years of booming house price growth.

Findlay said the major banks typically required developers to have a 28-32 per cent profit margin built into their business cases to secure bank loans for their projects.

That meant those who had secured funding could cut profit margins significantly to push through sales.

Pete Evans, national director of property development at Colliers, said he didn't know specific details about the Westmere development but the price cuts were among the more "extreme" he had heard about.

It suggested the project had previously had a big profit margin built into it, he said.

The "bespoke" townhouses are a mix of two and three bedrooms, and come with underground garaging and French oak flooring.