There was an increase in both the number of properties offered and the number of properties sold at Barfoot & Thompson's latest auctions.
Over the week from July 2-6, Auckland's biggest real estate agency marketed 101 properties for sale by auction, up from 78 the previous week.
Of those, 23 were sold under the hammer giving an overall sales rate of 23%, up from 19% the previous week.
But despite the slight rise in numbers, auction activity remains at a very low level.
A year ago, over the week from 3-9 July 2021, Barfoot & Thompson auctioned 199 residential properties and sold 132 of them under the hammer, giving a sales rate of 67%.
So essentially, the number of properties being offered at auction has halved over the last 12 months while the number selling at auction has declined from two thirds to less than a quarter.
Details of the individual properties offered at all of the auctions monitored by interest.co.nz and the results achieved, including the prices of those that sold, are available on our Residential Auction Results page.
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81 Comments
Still a long way to go for the price to fall ......
Stagflation is brutal. As we all enter this reset, those who lose the least wealth will be well placed to go shopping for (real) investment value.
Indeed Retired-Poppy, but it is a point of interest.
@HW2 - oneroof finally has an estimated value for my place below the RV. Hoping it trends towards the lower estimated value - was a buyer in the market now, I'd use that as my starting point (ie. approx 20% above 2017 RV).
** this comment was intended for the discussion below**
7% mortgage rates are a certainty.
-30% by Christmas. Guaranteed.
you wont see 7% interest now, recession seems to be priced in
Someone mentioned their house value on homes had fallen a lot. So I looked up mine and it is still generously above 1.2. No change. Auckland home. I must be in the right street
HW2, don't read to much into these values on Homes.co.nz. Its a crock. Agents upload data to it.
I own my Auckland home, the bank doesn't. Its a family home. not a leveraged investment in which I have to check its daily value:)
Enjoy life!
Homes is suddenly very accurate if the house just sold LOL for some reason the sold price suddenly becomes the value. No idea how those two values correlate must be that very complex algorithm.
Indeed, its a crock.
https://www.stuff.co.nz/business/127537672/homesconz-criticised-for-all…
Indeed. Home.co and the agent manipulation present a impartial statistics must be borderline on fraud. Disregard.
Not checked daily.... but you have checked. Hilarious.
HW2, I suggest you read my comment carefully - hilarious!
Norrington : And I half expected it to be made of wood. You are without doubt the worst pirate I've ever heard of. Jack Sparrow : But you have heard of me
When my daughter and her husband looked at upgrading to a lifestyle property the value attributed to it on Homes was the land value.as the house was only a year or so old. After she went to look at it the agent amended it to a figure that obviously the vendors wanted for the property including improvements. My daughter initially missed out as some Aucklanders put in a conditional offer that was close to the new value on Homes. They failed to sell and cancelled their contract. My daughter then bought it and immediately the Agent changed the value back to what my daughter bought it for. And we are talking to about winding back a substantial amount of money here. Yes agents have been playing with Homes and there are people out there who have been sucked into paying too much for a property as agents have been using Homes to get a certain figure and some buyers have thought Homes is gospel. It’s disgusting that this can happen.
Glad she got her property!!! When dealing with real estate, as any investment, assume everyone is out to get you, no one intentionally leaves much fat in the deal for the purchaser....
The real estate industry in this country is corrupt beyond belief.
Many of the business practices seem to resemble those one would encounter in mainland China for reasons I can't quite put my finger on.
Value = what something sold for.
Valuation = an estimate of value (based on historical data) if sold in the market with a willing buyer and seller and can only be done and called that by a registered valuer.
Appraisal/Estimate = an estimate of value done by anyone else, which may or may not follow the same valuation methodology.
I can't see anything on Homes where they say value, unless they have a registered valuation (RV), because if they did say that without an RV, they would be breaking the law.
Tell that to the average punter/buyer as Homes do not. We are so trusting in NZ and sometimes we pay dearly for it. How many New Zealanders know agents go into Homes and play with it to their advantage. Luckily I saw what they did and I could afford to get valuation advice for my daughter. And I talked to agents in other firms.
The question is, did what you signed up for equal your banks registered valuation?
For anyone with a minimum understanding of when a bubble is going to pop, one of the clear symptoms of the property market popping is the dramatical change in real state transactions. The data from the last months is not anecdotal anymore and is now a trend. Many obvious factors are telling us that we are for one of the biggest crashes in the history: increase of interest rates, increase of number of properties, insanely overvalued houses, potential recession, better return for bank savings, loss of high paid professionals... Can anyone please (and this is not a rhetorical question) tell me how the property market is not going to go down for at least 35% in the next two-three years? thanks
You need to understand that property in NZ defies all logic. It's the only way to explain that why in 3 years time property has NOT fallen 35%. You can run round in circles with reasons why it will drop and at the same time the market does the complete opposite.
It has been very well supported by politicians and central bankers, for sure.
Can anyone please (and this is not a rhetorical question) tell me how the property market is not going to go down for at least 35%
Find out what the same house built new will cost. Dont ask for anecdotes from DGM interest.co common-tators
... the key I think is not the cost of materials & labour , but the artificially high cost of land ... there's where the potential for price falls lies ...
Of course 100% correct, but the land does have an artificial underwrite on it with the restrictions that both land bankers and council can force on it, by just sitting on the zoned land and consents they have and stopping anyone else from adding cheaper supply.
A lot of the land bankers holders are big corporates funneling excess profit into landbank holdings, rather than bank holdings, so can let it sit there with no incentive to sell even in a falling market and will just ride this out for the next upswing.
The only thing that would make them go to market earlier is the Govt. relaxed land-use rules and thus there would not be an upswing in their property again.
If this is going to burn, then it has to burn roots and all so a different stable housing crop can be planted and grow, otherwise, the same weeds will return.
And what about the others like ourselves who are hamstrung by regulations that stymie new housing. Even though council water and sewerage services are already available at the gate. People who come to our property inevitably think we will turn it all into housing starting next week.
So what regulations, in particular, are stymieing you from developing?
Plenty, where does one start? Which goes to show that what people generally think is reasonable and should be done is not always the case when it comes to regulatory authorities.
Thankfully it is not my only property and we have another that has been given the first BIG tick. Still early stages and I have to find out the hard way just how slow are the wheels. All of the services are already provided so council does not need to do more infrastructure. We have done our side and waiting for council to issue final paperwork since January 2022 when their decision was released. That decision should have come out I think mid 2021 but this particular council kept getting extensions. The old covid chestnut was used of course.
One thing I've learned with another application for what is a tiny two home development is that you do not want to get bogged down in the RMA. Been a few years already and lots of dosh for reports and redoing plans and hearings. Council does not have a leg to stand on yet they still hide behind the process and dont help much. More recently they have started to pull finger so with a bit of luck I might get my resource consent soon. This century at least if I do not give up.
If all services are to your boundary, then there are no physical reasons for any delay, meaning that the delay is totally bureaucratically driven.
The best response I have had with a council, with our particular development methodology, as being a private plan change for 75 sections, from signing the land purchase agreement to beginning development, with all sections sold, in only 9 months. It was enjoyable for all parties in working together.
Almost all of NZ's problems are because of what happens between public officials' heads, ie the way they think. They want to be obstructive because it suits their vested interests, so they are. This then in turn creates a perverse parallel response by developers as they try to work around the bureaucracy.
What was the time-frame for the PPC and costs if you dont mind sharing it.
In that first case we are on town boundary where the other council owns the asset. Currently we enjoy access to that councils town water but they will not allow wastewater connection. Not even for the one existing house. The specialists I have spoken with have made a few suggestions but do not have much hope of success.
We did this in 2005, can't remember the costs, except $100,000 to upgrade the pump station, not only for ourselves but that end of town as well. Was publicly notified consent, and we had a very proactive engagement with both council and the local community, and the community was great as well, so yes they had questions, to which we had satisfactory answers.
Regarding your wastewater issue, are the council saying that if a connection was available they would allow you to connect, or are they saying no regardless? If they are saying no regardless, what is the reason?
There are modern STEP-type systems you can put in now that are indepensnent of having to hook up to council and are cheaper and more environmentally friendly than the council system. So as long as you can meet the environmental benchmarks, then the council should have no reason, both legally, and environmentally from preventing you from developing.
No regardless I think. According to neighbours and no reason given. Thanks for the info Dale
According to the CCCI index, the cost of building a house has increased by about 10% since the start of 2020 (last reported march 2022).
Median house prices increased by about 30% during the same time.
Since the CCCI index started in 2013, the cost to build has increased by 46% while the median house price has increased by about 120%.
Those few people with a vested interest in more expensive housing seem to be bringing up building cost a lot at the moment as if it will provide a floor. They may be right, but we have a lot of falling to do before this floor comes into view - prices have become wildly detached from build costs and this has manifested in high land prices.
Using REINZ median figures
https://www.interest.co.nz/charts/real-estate/median-price-reinz
CCCI index is freely available through CoreLogic if you give them your e-mail.
Not sure about building costs, houses around here are older than 30 years, first sold for 200k, then 4 years ago, 600k, now 900k. Same house, old and tiny.
... I'm curious as to how much extra cost in house construction is the bureaucrats , the busy bodies in local council poking their noses in where they dont actually know WTF they're doing ... and then billing the client OTT for their " services " ... resource consents , numerous inspections & the like ...
You don't think the wholesale price of construction materials has maybe risen to meet what people are capable of spending?
House prices rose from loose credit and frenzy bidding, not from vendors obtaining replacement quotes for their houses to set the benchmark price. If existing house prices rise 30% in a year, manufacturers such as Winstones would react by increasing wholesale prices by 30%. If not then their price quality team are morons.
It's the land value which is the major driver.
... much alike a castrated glass-blower , I don't have a crystal ball ... but ... house prices were already in frothy bubble territory prior to the Covid19 arriving ... the totally OTT panic & economic stimulus by the Reverse Bank & by Robbo simply sent those prices to infinity & beyond ...
So yes , you're correct , this time is different ... this time prices ought to contract heavily ...
Not to forget that earlier, whenever market was softening, RBNZ will go all out to stimulate by lowering interest rate and changing policies like LVR to boost demand but this time......even if they want are unable and is the first time in decades......house price is falling and rbnz instead of boosting is forced to .........
YES....This time is different.........
Why can't RBNZ change LVR rules?
They can, but the banks won't care at this point.
As soon as prices start to fall, banks get risk averse in their lending.
It has always been this way. Banks will lend out umbrellas, but take them back as soon as it starts to rain.
The looser the LVR rules the more demand in the market... I think banks would be keen on this. All they'd need next is rates dropping... and they'd be away laughing like it was 2020 again.
Did you mean
".....much alike a castrated glass-blower , I don't have 2 crystal balls"
As with previous rises it will not be even. There will be differences by suburb, differences by house type - the trend is down and down fast but it will be uneven.
... my guess is that places like Gore & the Buller won't fall so far as a % , compared to high fliers like Tauranga & Orc Land ...
Beats me that houses in Orc Land are 4 times more expensive than those in Greymouth ... but , there it is ...
I'm told that build cost supports the house price, so I guess Auckland builders have 1/4 the efficiency of West Coast builders, or are buying much fancier GIB?
West Coast builders are incentivised to get the roof on lickety splick ... when it rains , it buckets down ...
The stuff selling may well go down 35% the one you want to buy may not want to sell at this level... lots of crap sells at the bottom....
You have to be realistic and look at what the property is actually worth and what other's in the street are actually selling for. Very few properties are unique and are worth paying extra for. For me my place has an epic view that I was prepared to pay the asking price for that but for other people that may be worthless and they are only interested in a stone kitchen bench top.
I always wanted view, but now close to town and school but lifestyle block with pool and nice garden. Sort of view but still nice. Kids helped to change my choice.
In my opinion 35% is definitely possible but not that likely. I would put my money on falls of 20-25% max.
There are two main reasons for this:
- Although recession is likely, I don’t see unemployment going above 6-7%. I think we’d need to see unemployment go above 8% to get 35% price falls
- I think the OCR rates will be paused in 2-3 months, then cuts will start by May 2023. These cuts will start stabilising price falls
Finally, price changes are ‘stickier’ on the way down.
Good points, HM, and thanks for your opinion.
If NZ's prices do down 20-25%, what do you think will happen to Auckland and Welly's prices? I guess they'll end up at -35%? (I live in Auckland.)
If house prices drop 35%, it will be too far below the cost of replacement, and building would basically stop...then prices would start rising again...
I think the price falls will be fairly consistent across NZ, eventually (some will lag).
I think it will be -20 to -25% in Auckland, obviously some areas within the city will fare worse than others ( some areas will drop 30%, others 15%)
Thanks, HM. We live in interesting times.
Well if you consider interest rates have already kneecapped borrowing power by 30%, why would 30% price falls be out of the equation? Combined with banks starting to hard limit 80% LVR. OCR increases might be paused in 2 - 3 months, but after another 50 - 100bp is added.
Depending on how big the falls are, will the May 2023 cuts be enough to turn around negative sentiment? Also, how much housing demand was pulled forward in the last 2 years when the LVR restrictions were removed and interest rates bottomed out?
I definitely don’t think 30% falls from peak are ‘out of the equation’. Just less likely than 20-25% falls.
I would estimate following probabilities in terms of falls from peak to trough:
10-15% falls: 7.5% chance
15-20% falls: 25% chance
20-25% falls: 35% chance
25-30% falls: 15% chance
30-35% falls: 10% chance
35-40% fall: 5% chance
40% or more fall: 2.5% chance
People need to start qualifying the percentage is this nationwide or just Auckland and Wellington ? The cities are going to get smashed harder than the regions. A 15% fall in Auckland is all but guaranteed now all it's going to take is another 50bps rise.
The above is nationwide.
I don’t think the regions will fare better than Aucks and Wells, some regions may fare worse. Some silly prices in the regions, places like Palmy and Dunners are way overvalued in my opinion
In Ireland prices fell 6% in the first year and 9% in Dublin. So the main center fall was 50% higher (in percentage terms) than regional. Since HM is talking Nationwide of 20 - 25%, then Auck/Welly = 30-37%? A 30% fall reverses a 43% increase, 37% = 59%.
But we're not Ireland, so can only surmise. But their house price to income ratio peaked at a little over 5, what's ours?
https://thomasthethinkengine.files.wordpress.com/2010/04/house-price-ra…
its always mispriced tail risk........
Joaquin - a key factor will be whether people keep their jobs or whether they will be forced to sell due to job loss or their business going under.
After the GFC, I noticed it took a while before there was distressed selling - as people fight to hold onto their homes. On my street, several people were sadly forced to sell their houses as their business had gone under or work had dried up (tradies).
Nothing particularly notable in the B&T Auckland auctions this week. Again some houses got passed in even with bids near the current RV and what did sell appeared to get good prices.
House price drop apocalypse not yet upon us.
In the meantime those waiting for last years price on fixed cheap debt are facing much higher rates on rollover. Buyers and sellers are facing much higher prices on everything as the dollar continues to drop and inflation continues to roar. Everyone will have less and less debt servicing as a result.
The speculative who want to continue their debt bender will just say "put up the rent". This will continue to drive our best future tax payers to Aussie.
Winning. BTW how did Charlie Sheen look at the end of his bender?
✈️✅
So half the number of auctions and only a quarter of those that do are selling. Wow. Auctions used to be 100% or near on. Denial.
Summary. Auction success is around 12.5% of what it has been.
#agentexit
Do you know you can pick up a new small home 140m2 in Hamilton on a small section 350m2 for just 750k. They are selling
Only $750k
thats our problem
Exactly. In the Tron, a tiny regional city.
fair value for those would be 550K max
NZ would certainly have to be exceptional globally for 550k to be fair value in Hamilton. There are few redeeming features in Hamilton, I would much rather live in an equivalent sized city in Europe, Aus, US etc and prices would be much cheaper.
550K in the Tron would need to be a mansion for it to be worth that. New Zealand housing reminds me of boiling the frog in water slowly. Prices were terminal many years ago but because they were going up slowly no-one realised we were being cooked. Everyone outside looking in could see the temperature getting ramped up but when you're in it you don't notice what's happening as much. Everyone should have jumped out ages ago but instead we just said it's only a little bit warmer, no need to get out yet. Now we're cooked and can't get out, many just don't realise it yet.
This is a great analogy. Many of us that have lived overseas view this place as an insane asylum.
people want 600 for old shite rs in Turangi.....
Probably 250k cheaper than auckland, plenty of room to grow prices. Hamiltons economy is performing strongly right now I guess housing is probably part of the reason. Yes it's chilly in winter but that's 3 months in 12. Auckland traffic is 12 out of 12
Traffic will be fairly irrelevant soon. Any town or city that doesn't adapt to much less driving is going to go under pretty quickly
Only... that is why we are in this position.
Sounds similar to my house selling in a similar sized city in the UK, similarly close to a major city.
Only difference is my house in the UK has twice the land and half the price.
There needs to be a Royal Commission enquiry into how homes co nz and one roof have had the freedom to pump out propaganda and allow agents to peddle mistruths. The people who will suffer are the ones who sacrificed years of their life to get to a 20% deposit that has now been wiped out. Of course there is a blip on the median price - that's boomers buying and selling in the same market while the rest goes unsold.
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