Barfoot & Thompson's auction rooms started cranking back up again last week (ended February 3) with the company marketing 53 residential properties for sale by auction and achieving sales on 28 of them, giving an initial clearance rate of 53%.
Prices ranged from $370,000 for a house on a lifestyle block in Northland, to $2.43 million for a character bungalow in original condition in Parnell.
In general houses in the central Auckland suburbs sold the most readily, while those in south Auckland often struggled to sell under the hammer (see table below for sales by auction venue).
The prices achieved on individual properties can be viewed on our Auctions/Sales results page, along with details of the properties that failed to sell at auction.
| Venue | Sold* | Not Sold** | Total |
| Shortland St, CBD: 3 February | 1 | 1 | 2 |
| Shortland St, CBD: 2 February | 2 | 2 | 4 |
| North Shore: 2 February | 8 | 7 | 15 |
| Kerikeri: 2 February | 2 | 2 | 4 |
| Pukekohe: 1 February | 0 | 3 | 3 |
| Shortland St, CBD: 1 February | 7 | 3 | 10 |
| Manukau: 31 January | 5 | 5 | 10 |
| On site: Last week | 3 | 2 | 5 |
| Total for the week | 28 | 25 | 53 |
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*Sold means sold under the hammer of by 5pm the following day. **Not sold includes properties passed in at auction or postponed or withdrawn from auction. |
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64 Comments
Wow still really low property volumes and low sales clearance rates. Also looking at what use to be the more popular areas with in Auckland for driving up property prices; North shore and East (Manukau) are now giving the lowest results that's due to the lack of foreign buyers since the recent clamp downs on capital flight from China.
Won't be too long before local kiwi buyers realize that the pressure is off and therefore will be more likely to put forward cheeky offers.
Still not getting the 80% clearance we were for 2015 / majority of 2016.. but I suspect over summer we'll end up at about ~60%. The good properties will go well and the damp, crappy outlying properties of Auckland will hang around on the market for a fair bit longer.
@ diy-guy: Don't kid yourself, there maybe a few people that are able to tap in to offshore tax haven funds but that won't last long. Since China will have to be more aggressive to stem capital out flows, we all know that's where the majority of the Auckland property money has come from in recent years.
https://www.bloomberg.com/news/videos/2017-02-07/will-china-act-more-ag…
Because local Investors are faced with stumping up 40% deposits which has pretty much pushed them out, plus rents are taped out anyway. FTB's can't afford to buy especially if interest rates are going up. So who does that leave: Overseas Investors - Speculators, pushing property markets up!
How do we know this: Since the Chinese capital flight restrictions the market has dropped dramatically!
Really Yvil, so where is your evidence that property prices are about to boom?? At least I provide relevant news links to show what's happening. And have you not been reading today's articles?
So put your money where your mouth is!! Show me YOUR EVIDENCE that property prices will rise?
What you really think that FTB's are going to be able to afford million dollar homes on an average NZ salary? Are you Mad??
The most FTB's can afford on even a good Auckland salary with two wage earners is around $500 to 600k and god help them if they have kids.
And yes sales have dropped dramatically, look at the poor auction results.
Hi CJ,
its all good and well the capital flight have slowed, but what about all the capital that's left already? US$550 Billion just for last year alone! https://www.bloomberg.com/news/articles/2016-01-14/china-s-capital-flig…
I reckon that's a fair few properties that can be bought and sold for a number of years to come.
Key is Chinese Nationals now have to sign an official government document (ie Communist Party document) stating that any funds taken offshore will not be used to buy property. Many Chinese wanting to get money out of China may have pushed the envelope, but will not now given they have to sign an official document presented by a Communist party official. I note the Chinese billionaire picked up 2 weeks previously in Hong Kong, is still in custody somewhere in China.
South Auckland- the speculators paradise.
Those spruikers who conned naive "investors" into buying up cheap houses rented by cheap tenants may well have a riot on their door steps. Many of the sales in that region were by fired up investors selling to each other whipped on by their spruiker masters. Another bunch were conned into believing that renovations were the only way to make capital gain only to find that their "reno" jobs were reduced to splinters along with their "profit" within 12 months. If there is ever a property crash it will start in South Auckland and the other equivalent areas in the country. Rubbish x rubbish = rubbish.
Already? geez some people are keen!
I am still on holiday mode and I am sure a lot of people still are. Not in the mood to look at houses at the moment. if the weather is good on the weekend I'd be at the beach and overseas trips are still on many peoples calendars. I say late April is when people are really going to start picking up those property ads again.
There's plenty of evidence to point to how the market is declining. If you want to buy a million plus dollar home, no one is stopping you. Just remember that I and a lot of others tried to warn you that you're about to loose a lot of money.
There's a lot of Real Estate Agents on this site that will want you to part with your money as soon as possible.
Investors and even financial professionals rarely recognize asset bubbles while they are in progress. As the price of a financial asset rises, investors have an increasing tendency to use the past returns and the past trajectory of the asset as the basis for their future return expectations. The more extended the advance, and the higher valuations become, the more stable and promising the investment can appear to be, when judged through the rear-view mirror. That extrapolation was at the root of the tech bubble that ended in 2000, and the mortgage bubble that ended in 2007. It is also at the root of the very mature bubble that has again been established today. The exodus of investors from flexible investment disciplines to passive investing and indexing, at valuations that are among the most obscene in history, is a symptom of a performance-chasing mentality dressed in the clothing of prudence.
https://www.hussmanfunds.com/wmc/wmc170206.htm
I have seen it all before, the Auckland market is toast. So much of Auckland's GDP is property related it will get ugly, think property related industries (eg real estate agents, stagers, property valuers, mortgage brokers etc) and property related wealth effect (eg new car sales, furniture, renovations, restaurant spend etc). The big risk is a NZ recession coming out of Auckland will increase the risk premium for offshore sourced funds for NZ lenders. The recession will also trigger a falling NZ dollar, and increased tradeable inflation. So the Reserve Bank may have their hands tied by underlying tradeable inflation that more than offsets reduced domestic non-tradeable inflation, regarding OCR cuts. This will likely coincide with that risk premium being tacked onto mortgage rates. When things go bad they tend to all go bad at once, this is the potential inflationary s**t-storm scenario tied to a declining NZ dollar.
And don't forget that a recession, will turn off that immigration tap quick smart.
There has been hardly any drop in property value so far, property market had a slow down trend the last couple of months, and now its starting to pickup again, as per this article and many other reasons. There seems to be two groups debating here, ones that are hoping to get on the property ladder, hoping for price reduction and the ones who already own hoping for increases?
So... Buy when its affordable for you to do so, you will not loose in property in long term.
If you own a property, increase or decrease will not effect you.
"you will not loose [sic] in property in long term."
This is impossible to know, even on the basic 'will my house have a higher dollar value in the future than it does today?' level, let alone including inflation, or the comparison vs renting & investing in alternative assets, or vs waiting for a more opportune time to buy and renting in the meantime. I'm always cautious of people presenting complex situations as black and white.
No doubt there are psychological benefits to owning (and also costs), but it's certainly not a clear-cut financial decision when you cost things properly and acknowledge risk.
Property prices over the long-term are related to the household income of domestic citizens and prevailing long term mortgage interest rates. Short term distortions are related to foreign purchasers (can be turned off at stroke of pen by the government), the economic cycle, banking liquidity, interest rates and incentives for various investment classes including property.
So for the long-term outlook first look at household income, not much scope to add more income earners per household as women have entered work force and probably at capacity. So we are relying on wage growth, so we need inflation and productivity gains. Concern is with the age of information technology and robotics we may be in an age of minimal inflation, and minimal wage rises. As rising wages increases incentive to automate and replace a human worker with a machine. We are already seeing this worldwide. So the one remaining possible tailwind for property are interest rate decreases.
The last 40 years have had the tail winds of increased household income (inflation, reduced tax rates and women entering workforce) and a secular decline in mortgage rates. These tailwinds are now gone. The property market may in general enter a decline followed by drift sideways with bull and bear cycles depending on the economic cycle.
So in answer the secular tail winds that have pushed property prices up are gone, and you can no longer bank on perpetually rising property prices. My guess would be that in 20 years Auckland property prices will have increased at the most 50% related to underlying inflation and population growth. But if property prices were at the present level I would not be surprised.
MJA... thks... thoughtful comments... maybe I can try to add to them... ??
household income is one way to look at it.... For me, debt servicing/income is more important, and obviously, thats a function of interest rates..
If you look at this chart, you can see the debt servicing burden is not at extreme levels..
http://www.rbnz.govt.nz/statistics/key-graphs/key-graph-household-debt.
I agree with what u say about household income and interest rates.
(You might find that the productivity gains of robotics and AI will accrue into the locational value of land, even as human workers are replaced by machines )
With the "financialization" of almost everything., I've found credit to be an important thing to watch..
I closely watch the credit aggregates..... (one mans spending is another mans income... , which sounds like a cliche , but I've found it to be profoundly important )
I hear what you are saying about secular tailwinds, and I kinda agree yet disagree with you..
The biggest tailwind for property is the nature of our Monetary system itself.... ( My view is that Asset price inflation is a function of Monetary Inflation..... ie. money supply growth ).
This tailwind of Monetary inflation has not ended.... and it won't until there is a change in tack in the Global Central Banks and Govts.... A shift in their paradigm. ( Debt Capitalism is still the paradigm )
Isnt Trump planning an infrastructure spending spree...??
At the first sign of a recession, Govts will spend... and Central Banks will ease and open the liquidity floodgates..
Some people here are calling for a 20% collapse in house prices this yr.... I don't know what they base that on..??
My best guess is flat to slightly down for 2017...??? and that is just a guess.... I haven't done the research.
My understanding is that one the first things to decline in price, as the first real sign of a change in trend in house prices , is in land values. ie.. section values , land for section development... etc...
Does anyone know of land prices declining..??
As far as I know.... the NZ economy is steady and employment is strong..?? at the moment
I think this one is going to be much harder to ride out then the Global Financial Crash in the UK (From what what I experienced in the UK as an example). It took five years to recover for areas just outside of London.
London wasn't too badly effected as it was propped up by guess what; Overseas Investors. Which are quite a mix not just from China which the Auckland market is highly reliant on.
We're looking at least a -20% drop. Remember when Auckland experienced a drop last year again due to foreign investors being shut out for three months (Form Oct 2015 to Jan 2016) whilst they had to registered with the IRD. That was a drop of around -10% in only three months.
And we're now experiencing the same again and remember the Capital Controls from China mainly kicked in at the end of December 16 so it hasn't been long. China are about to step up their controls once again if you look at the current news on this site and other such as Bloomberg and main stream media.
And then there's Trump who is very likely to start slapping tariffs around that will cause China to tighten even further.
So in short; we're looking at a long drop without a safety net. Prices need to return to more affordable levels that are in line with wages, that will help NZ economy in the long term that in turn will allow the housing market and prices to recover.
Good question NB, the answer is simple, whilst past performance is no guarantee for future performance, it is still by far the best predicting tool and a very accurate one for real estate over the long term. So looking over many past decades house prices double about every 7 - 8 years. Say it will take 10 years to double because prices are overextended right now. So the answer is an average house in Auckland in 20 years will be about $4 Million. If you think now this is crazy high, then you are no different from the person in 1997 thinking prices would never reach 1 Million, when they were $200'000 (which would mean $800k now but, as I said prices are overextended right now)
In short, an average house will be $4 Million in Auckland in 20 years
Yvil you do realize that a good salary in Auckland is around 60k, and even if you have a two wage earners income with one child, the maximum you can borrow even with a $50k deposit is around 600 to 700k, so how do you expect them to afford a 1 million dollar home?
You're crazy if you think average Kiwis will be able to afford a 4million dollar homes in 20 years. And for the record in the last 10 years; Auckland house prices have been doubling at a much, much higher rate than every 10 years, thanks to foreign investors.
But then again Estate Agents will say any old rubbish to keep the property prices up!
Not waiting for price falls to buy, invested heavily post GFC in upper middle class suburbs, have sold 60% of properties to clear debt. Will now sit back with own home and some well located rental properties (would not fully sell out, as I like to be diversified as anything can happen in markets). So I'm holding investment properties, but anticipate prices will fall. As at the end of the day well located residential property provides reliable cashflow.
I know!
All those stupid 15-20 year old's 10 years ago - what were they thinking???? And all those idiots in University studying when they could have brought houses!!!
Or all those in the middle of a divorce or coming from less privileged backgrounds - why didnt they do it!???
You sir are a fool
TheMan2, basically clearing debt so fully cashed up. If property market continues up I'm happy as I own property. But if property declines then I have a lot of cash and borrowing capacity to secure deals. Tend to only go hard into market when I can buy a less than 10yr old house in a good suburb for replacement cost of improvements + max 50K to account for land. So at present in my home suburb (lower north island) a 200sqm 5-10yr old brick and tile house would sell for 650-700K. I would be a buyer at about 500-525K (replacement cost say 450-475K + 50K for land), but this requires very motivated vendors. So I will sit back and wait for the next recession and enjoy being debt free in the meantime.
Lets put it into perspective, example, If you purchased a property now, in this current market and you decided to sell and purchase another property in 7-8 years time, would you loose or gain financial benefit from the property you have just purchased?
Irrespective of what you paid for your property, when you decide to sell and repurchase, you be paying the equivalent to the market because not only yours has gained or depreciated in value. If anything, I would say in 8 years time from now you will end up with more equity.
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