Auction sales rates at Barfoot's latest major auctions ranged from under a third at Manukau to more than half in central Auckland and on the North Shore

Barfoot & Thompson achieved sales on nearly half the homes it took to auction last week.

Auckland's largest real estate agency marketed 132 homes for sale by auction and sold 59 of them either under the hammer or by 5pm the following day, giving an overall sales clearance rate of 45%.

The auction rooms have been a bit quieter lately as the market comes off its summer peak and heads towards the slower winter season and although the number of homes being auctioned has dropped away, sales rates have remained fairly consistent.

The highest sales rate achieved at Barfoot's auctions last week was in their Shortland St rooms in the CBD on May 10, where sales were achieved on 20 of the 35 homes scheduled for auction, giving a sales clearance rate of 57%.

Most of the homes offered at that auction were in central Auckland suburbs such as Remuera, One Tree Hill, Sandringham, Mt Eden and Epsom, where the market remains a bit more buoyant than in suburbs further out of town.

At the North Shore auction the sales rate was 54% and at Manukau it was 31% (see table below for all areas).

You can see the full results with the prices achieved on individual properties that sold, on our Auction Results page.

Barfoot & Thompson Auction Results for week ending 12 May 2017
Venue/Date Sold Not sold Total
On site 3 3 6
Manukau, 9 May 2017 10 22 32
Shortland St, CBD. 9 May 2017 6 10 16
Shortland St, CBD. 10 May 2017 20 15 35
Pukekohe, 10 May 2017 0 1 1
North Shore, 11 May 2017 15 13 28
Shortland St, CBD. 11 May 2017 5 8 13
Kerikeri, 11 May 2017 0 1 1
Total 59 73 132

You can receive all of our property articles automatically by subscribing to our free email Property Newsletter. This will deliver all of our property-related articles, including auction results and interest rate updates, directly to your in-box 3-5 times a week. We don't share your details with third parties and you can unsubscribe at any time. To subscribe just click on this link, scroll down to "Property email newsletter"and enter your email address.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment or click on the "Register" link below a comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.

48 Comments

In other words over half the properties offered didn't sell leaving a lot of frustrated sellers out of pocket going now where.

I think some need to exit ASAP so whatever the cost to get out with some money rather than going broke.

Given what has been discovered in Canada where they found that HCG have ended up issuing 60% of their mortgages as NINJA loans I'm wondering what is really going on here. How many dodgy mortgage brokers are misleading banks and haven't been found out? How many mortgages are going into default?

One-eyed-olly

The 55% un-successful sales could also represent frustrated buyers missing out because the vendors wouldn't meet the market

BigDaddy - you know full well that Barfoot agents get most of the commission from an auction sale vs a sale by negotiation where they may have to share a huge chunk of the commission with the introducing agent....

Therefore more BF agents take houses to Auction look at the Ray White Manakau sales , that agency is doing quite well.

I also think that with the National building plan, its a wake-up call for developers that things might not get better anytime soon, and cut your losses now. See how many sections are currently for sale, especially on City fringes where developers have been lapping them up in the past. Also new completed homes are sitting around longer. How long before we see more of them liquidated, as the current drop-off in sales must be stretching cash flow to breaking point.

Those paper millionaires are at high risk since it's only really the affordable property that's really selling.
https://betterdwelling.com/capital-controls-continue-halt-mainland-chine...

What's a paper millionaire ?

.... the Ontario teachers ... who're pouring $A 2.8 Billion into buying Fairfax ...

Very soon , they will be " paper millionaires " ...

Michael West‏ @MichaelWestBiz 39m39 minutes ago
Maserati Greg is up #PIJ: Goog&FB have caused ad revs to halve in five years

... you'd hope for their sake , that those Ontario teachers truly love fronting up to a class filled with slack-jawed moose-burger munching Canuck kids every day ...

'Cos its gonna be many many years before they'll collect a decent pension from their investments in our Yellow Pages , and in Aussie's Fairfax ...

Sam D: "what did you get paid last year?" GH: question not important #PIJ q on notice

@Yvil: Paper millionaires like Zachary and DGZ who have found unexpected wealth in the last few years with property prices rocketing out of control fulled by foreign buyers. The danger is if they have borrowed considerable amounts of capital against their properties to fund other property ventures. That's when people become unstuck in a falling market.

But in reality they've generated no wealth at all in terms of their buying power into the market they operate in. I doubt DGZ wants to move outside DGZ and if he wanted to upgrade his home in the area, well he/she'll (or in between) will still need to borrow the money to do so. So for almost all home owners, the increase in house prices is a zero sum event. Their buying power hasn't increased. Just FHB/next generation get smashed by it with little to no benefit to current owners unless they own 5 properties that they intend to sell, or if you plan to sell up your only home in Aucklandand and decide to retire to Gore. The whole thing is rediculous and it's going to be an anchor that drags on economy for years to come.

Sounds like a brick & mortar millionaires to me

Not for long at the rate the Auckland market is falling. Remember that the top end foreign buyers have gone, so there's no one to buy those really expensive homes any more. They'll have to meet the existing market if they want to sell in the future.

They'll be fine, so will the Auckland housing market be, nice of you to be concerned though

Actually they won't and neither will anyone else who have over leveraged against their a property that's now deflating in value. But it's not them I'm concerned about it but thanks for being dismissive.

What I am concerned about is FTB's borrowing too much to purchase a home, they need to wait for prices to bottom out as I've mentioned not so long ago.

The other more major concern is the Banks who are now a risk of people defaulting on their mortgages as their property values deflate. Negative equity formed a big part of the GFC causing property markets to crash.

I'm a bit surprised clearance rates rebounded upwards from April, now that we're approaching winter

Maybe its because reality is setting in with Vendors

Manukau...only 10 out of 32.

Interesting. Manukau really hasn't gone well all this year.

That's a reasonable auction clearance rate, especially given the onset of winter.

Last week, people here were all gloom and doom....... This week, the residential property market is looking not so bad at all.

Yes don't worry, winter is here everyone can afford a house now...

In the past 4 weeks , Barfoots has sold just 38 percent of homes at auction or thereafter. 168 homes from 442 . 274 homes went to sale and did not reach their owners expectations. Barfoots monthly churn rates have never been higher. So plunging sales,high churn , monthly new listings higher than sales, yet overall volume for sale on websites is currently trending down. 2007 was the last time that sales volume headed south.This time is different, median price is $425K higher, there is 100B more in aggregate debt, the US Fed will not come to the rescue unless there is a global crisis, Australia will economically not come to the rescue, and changes in the OCR will not be reflected in declining mortgage rates. Come September/October the Auckland housing market could be a different beast. 274 times in the past month, not a single person out of billions were willing to commit to the price and opinion of a single vendor. The price of a home is an opinion, will those 274 vendors regret not having a lower expectation. Of course Auckland is different, migrants will buy them.

A 38 per cent auction clearance rate is reasonable. In any case, in some weeks recently the rate has been significantly higher than 38 per cent.

Auckland is still ticking over ok.

In 5-10 years time, I'll bet my bottom dollar Auckland house prices will be considerably higher than they are in May 2017.

If one is a long-term investor and holds for 10-20 years, then the outlook becomes even rosier.

I'm told by analysts that there are numerous people who come here with the agenda of "talking down the market". That's fair enough - people are entitled to do so. (Perhaps some of them regret missing out on the recent market upswing.)

Personally, I've never felt as positive about Auckland (and Wellington) as locations for property ownership/ investment.

Further, it's not just the "investment" aspect of these two markets that attracts me. It's living in them and enjoying being there! I love the buzz/culture of suburbs like Ponsonby (Auckland) and Mt Victoria and Brooklyn (Wellington). I also like their convenience in terms of travel/traffic.

So that will be greater then 13 times Income as I cant see wages going up much. Interesting times, will the bank lend at those levels. In the UK as a contractor on OK money, I got about 4 times income, it was easy to service. Wonder if greater then 13 times is great business sense for a bank. Personally I wouldnt lend at 13 times income but hey what do I know, Im conservative and wouldnt want to risk people defaulting on their mortgages.

If house prices are like that in NZ I would rather invest in Swansea (Wales), they are just adding on more to the university, investing and cleaning up the city, and house prices are very good. Great yields.

A friend of mine bought in Gold Coast 10 mins from the beach 450K, nice big section and swimming pool. Not sure NZ especially Auckland is good value.

Personally I have lived in cities for 20 years London and Auckland, Im from the country. I have kids now, Im moving back to the country, Im over the city, the buzz and the traffic. Im going back to do more fishing and surfing and chill.

"Personally I have lived in cities for 20 years London and Auckland, Im from the country. I have kids now, Im moving back to the country, Im over the city, the buzz and the traffic. Im going back to do more fishing and surfing and chill."

Great to know, Swapcrate! (Everyone to their own.) Enjoy!

I moved back to a rural town too. It was a bit of an adjustment at first and all those self-doubting questions kept re-surfacing until one day, six months later, I realised I had hardly any stress and my bank balance was looking pretty damn good. It would have been financial suicide for me if I hadn't of moved out of Auckland. My savings were starting to take a major hit and now I am in a really strong financial position with an awesome job and amazing colleagues.

Wow that's a very brave assumption. You really think house prices are going to stay 13 times over people's incomes in 10 years?

In case you haven't heard, capital flight from China has stopped, mortgage rates are increasing, consumer confidence decreasing. The only way prices are going to stay above 13 times income over the next 10 years is if people keep buying at those levels over the next 10 years.

This isn't really a matter of opinion or "to each his own". It's really purely simple maths and logic, and if local Kiwis incomes don't suddenly magically rise, I really really really doubt house prices will remain 13 times median income in 10 years time.

"In 5-10 years time, I'll bet my bottom dollar Auckland house prices will be considerably higher than they are in May 2017."

You are most likely correct in 10 years the prices are likely to be higher than today. If we assume a 2% wage inflation (in line with cost of living increases) people will be earning 19.5% more in 10 years, so a 10% increase over todays prices in 2027 will actually be an improvement. But lets say people are willing to pay 13 times income as today and prices increase by 20%.

I guess what is important is what happens in the meantime. I think everyone agrees that the house price to earning ratio is to high to be sustainable, so we should expect a correction either through high wage inflation or through house price deflation, the timing and extent of either or both will impact the length of house price stagnation.

Anyway lets assume you get a gain of 20% in the housing investment.

"If one is a long-term investor and holds for 10-20 years, then the outlook becomes even rosier."

This is also most likely correct, if you hold on to the housing asset it will most likely increase in price over the next 20 years, and should increase more than if you only hold the asset for 5 years, or 10, or 15 years.

Holding a poorly performing asset for so long would not be a great investment strategy however. Even a 10% annual gain that you reinvest on an investment portfolio would give you 6.1 times or original investment.

Do you think your 1m house will be worth 6.1m in 20 years?

To your last point, i think this is what it should all be about, buy a house to make it a home.

"To your last point, i think this is what it should all be about, buy a house to make it a home." I think any and all future legislation around housing absolutely must start with that premise

Hi RichMuhlach,

Capital flight, mortgage interest rates, consumer confidence, business confidence, GDP change, employment/unemployment levels, inflation/CPI, exchange rates etc, are all short term factors.

Too much focus on the short term is perilous with property investment.

Think of long-term factors, such as NZ's demographic trends and increasing concerns about global security and you have the key to astute property investment.

What happens when the big one hits Wellington?
Are we really such a safe and secure country when our second biggest city was decimated recently and our third biggest city and capital is also facing the prospect of a destructive event?
I find the smug complacency of many kiwis quite curious

A potential big earthquake in Wellington seems to be a recurring theme in your posts. Maybe the large seismic activity in the South Island over the last 10 years was the big one. The 1906 and 1989 San Francisco earthquakes, certainly has put off the world's IT sector essentially basing itself in greater San Francisco. Key in all markets, is in the long term the bull's win. Bears may have temporary profits, but the inexorable rise in prices as populations grow, ensures the bulls make the big money (though I certainly wouldn't be investing in the Auckland/ Hamilton/ Tauranga triangle at this time).

I think long term but I think Auckland has hit 50 year levels in 5 years. Especially with our low wages, and hopefully with the right government they turn off the foreign investment tap on real estate, and we see a very slow increase which matches NZ wage increase, but after a decline first.

tothepoint - I think you might have attended too many property investment seminars. We've probably just experienced the greatest appreciation in house values (inflation adjusted) in this country that any of us will ever see in our lifetimes. It's possibly a once in a 50 or 100 year event. To think it's going to continue or to get better, well that's certainly wishful thinking in my opinion.

Take a look at what Shiller put together for the USA in the form of inflation adjusted house prices 1890 onwards. http://visualizingeconomics.com/blog/2011/03/23/real-vs-nominal-housing-...

As you can see, real investment return in US housing is actually quite poor. But people seem to get tricked into thinking its generating great returns, but over the long term, that could well be a fallacy. Nominal figures look great, but you have to ask yourself, are they actually in real terms?

Does anyone on Interest know if there's inflation adjusted data available for NZ house price growth - similar to what Shiller did in the US?

The RBNZ website has all sorts of interesting spreadsheets from Bank Stability reports updated quarterley, to long time historical inflation charts and most of not all can be exported into Excel. Have fun! I have found them to be quite revealing if you like numbers.

I don't think you fully understand NZ's situation in relation to the rest of the world, both now and historically.

"In a research note published this week Goldman says the New Zealand's housing market is the most over-valued amongst the G-10 group of developed economies, Bloomberg reports." http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11857022

The factors I mentioned actually pertain to long (very long) term effects.

NZ Economists have mentioned the possibility of house prices actually stagnating over the next 20 years, which believe it or not is the preferred scenario over any housing market crash.

"Think of ... and you have the key to astute property investment" ... that sounds suspiciously like something a Property Investment Seminar tagline. Did you copy and paste that from one of Ron Hoy Fong's brochures?

:)

@tothepoint: Again you're completely missing the point! Demographics may be increasing but they're not bring the vasts amounts of free credit that we were seeing before the end of 2016.
Times have changed and the market is headed in a downward direction.

Wasn't it you who said the property market was 'doing really well' just before Barfoot announced their worst sales results in almost a decade!

Hi Independent_Observer (and others above),

I do appreciate your comments but just to make clear, I've never attended a property investment seminar - and have never been involved in the real estate sales industry.

Have been an interested observer of the property market since the 1960's - but don't have an extensive property portfolio.

The "great appreciation" in house prices that NZ has recently experienced is, in my opinion, more a structural phenomenon than a cyclical one.

Certainly, I think a major fall in NZ residential property prices is unlikely. I think it's much more likely that (average) house prices will plateau - and rise again after a period of time.

Globally, NZ is an increasingly popular country to live in - and for reasons which are easy to understand.

I don't disagree - NZ is popular now. But I think that popularity is going to become too much for many voters to put up with (especially with NZ residents who start to dislike the change it brings with it) for a number of different reasons. Time will tell of course... Popularity, fads and sentiment come and go, I don't see why this will be any different.

Hi again,

In many ways, the recent property market upswing is something I don't like.

I empathise with young families (a well as older people) who would love to own the roof they live under. I would dearly like to see more affordable housing in this country - especially the major centres. (And not just social housing.)

It's really tough out there - but I don't see a straightforward, workable solution. Even if we get a more egalitarian government in September, I don't think things will change.

I agree - we can blame and bash National all we like, but they don't govern AUS or CAN who have similar issues in their property market. So this problem is greater than any Government of these countries (and perhaps policy) - yet that doesn't mean that the elected party should shrug their shoulders of their responsibilities to all citizens of the countries they represent, and instead serve only those who are benefitting from the post-GFC environment - that is quite foolish and very short term thinking.

National have dug a big hole in terms of future popularity by ignoring a large and growing part of our demographic - critically they have denied the issue of housing (exists) and yet more information keeps being revealed to the contrary. So they have no moral ground to stand on now. If they simply admitted it was an issue, I think this would be less damaging.

As the saying goes, “The first step is admitting you have a problem.” Denial is a large part of addiction, and breaking through self-deception can be very difficult.

You can make a very good start on housing affordability by looking to policies used successfully in the past, and others now being used successfully in enclaves:

1. Large government build activity

2. Tax treatment of investment property and land banks

3. Tax treatment and/or other limitations on foreign purchases.

Personally don't see Auckland prices staying up as high as they are unless there are wage rises for people up there.
The cost of living in Auckland must be horrendous with many living hand to mouth.
Money has dried up from China from what I have heard from the restrictions being put on their citizens.
The biggest issue is that if you are holding property that you are propping up financially each week without any significant capital gain, people quickly get sick of that and need to sell.
Other markets around NZ offer far better returns and upside!

.

That's definitely happening. I know of at least 3 couples who are topping up their mortgage payments. Last year one of them was happily telling everyone it was "only $100 a week", I caught up with the guy earlier this week and they're getting very nervous now as their tenants aren't renewing and things are slowing in the market so they've had a reality check on what the downside can look like.

Pages