Leasehold units were popular at the latest Auckland apartment auctions but their prices have taken a hammering

An apartment in the Q City building sold for $86,000.

There was a good selection of properties on offer at this week's main Auckland apartment auctions, but buyers remained a bit on the cautious side.

Barfoot & Thompson had seven apartments up for grabs at their regular apartment auction, held at their Shortland Street rooms in Auckland's CBD.

Two were sold under the hammer and of the five that were passed in, two did not receive any bids, there was just one bidder for another, and two attracted multiple bids.

Two industrial properties, one at Onehunga and the other at Penrose, were also offered at the same auction but both were passed in.

Ray White City Apartments also had seven apartments on offer at their regular mid-week auction and sold three of them under the hammer.

Of the four that were passed in, there were multiple bidders on two of them and the remaining two properties attracted a single bid each.

Two of the apartments that sold were on leasehold titles.

One was a 40 square metre, one bedroom furnished unit in the Q City building on City Road, which runs between Symonds St and the top end of Queen St.

It had current outgoings including ground rent of $10,676 a year and and sold for $86,000, with the ground rent reviewed every five years and the next review scheduled for December next year,

According to QV.co.nz, the unit had originally been purchased for $163,000 in 2002 and resold for $72,000 in 2013.

The other leasehold sale was a 77 square metre, one bedroom apartment with a car park and harbour views in the Scene Three building on Beach Rd down by the waterfront.

It had total outgoings of $19,173 a year and sold for $151,000.

According to QV.co.nz it had originally been purchased for $420,000 in 2003 and resold for $360,000 in 2007.

The latest results suggested buyers are being much more cautious on price and while they are still active in the market, they are prepared to stick to their guns on price and take their chances on losing a property to an unconditional buyer after it is passed in.

Results of most of the residential property auctions conducted by Ray White City Apartments, Barfoot & Thompson, Harcourts, Bayleys and City Sales, are available on our Auctions Results page.

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36 Comments

Australian economy among ‘walking dead of debt.

NZ is different

http://www.news.com.au/finance/economy/australian-economy-among-walking-...

..at this week's main Auckland apartment auctions, but buyers remained a bit on the cautious side..

I wonder why!

Some so-called “market movements” on the bourses of the world are so clearly idiotic, one has to just keep on bashing away at the issue until some of the innocents finally wake up. By far the most brazenly obvious is the continuing attempt to keep the price of oil high – while at the same time pretending that “the world is finally returning to growth after the shock of 2008”. This process is, respectively, mendacious and complete tosh.....And trust me, there is no way the élites want too many people to catch on to what’s coming.

https://hat4uk.wordpress.com/2017/05/19/crash2-why-the-oil-glut-looks-mo...

Auckland remains a top medium/long-term bet for housing.

Short-term, there's not going to be any crash - although plenty here will be disappointed about that.

Location remains the key. Areas that avoid transport/traffic problems will likely have strong capital growth. (The same applies to Wellington.)

One of the biggest risks is political. It shouldn't be downplayed the effect of a change of government.

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@tothepoint: Really can you prove that everything is going to be ok for Auckland in the long term and that we should continue to buy and then buy some more? I don't think you can, in fact that sounds like RE bull s**t to me!

We've already seen a huge drop on North shore of - $115,000, and is highly likely to reduce considerably further along with the rest of Auckland. Price will fall to more affordable 2012 levels especially in the expensive areas.

Quoting yesterday's article: The latest monthly Real Estate Institute of New Zealand figures showing the Auckland median price down $50,500, or 5.6%, to $854,500 in April from March's record high of $905,000, and the North Shore median down a whopping $115,000, surely the slowdown of money coming in from China is a, or potentially the, key driver.

Hi CJ099,

Of course there will be ups and downs in the market - but that's far from a crash. It's standard market behaviour.

Sorry, but your much yearned for crash isn't about to happen. You will grow a very long beard waiting for it. What are you going to be saying next month (or the month after) if/when there's a rebound - as is quite possible.

As recently noted by Tony Alexander, BNZ Chief Economist, there are plenty of people waiting in the wings for an opportunity, in the event of any price weakness.

Further, Alexander said buyers should ignore reports of a property price collapse. Many were fearmongering, he said.

Analysts like Tony Alexander have far better access to information and market intelligence than mere casual observers.

420 360 151

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That's ok, "tothe point" I'll get you to eat your words later. And there are plenty of more credible sources then the likes of Tony, who really holds no substance at all.

See the really dumb thing that you and other RE's haven't taken in to account is that the the top end Buyers are GONE! And it's only those who are mortgage dependent can afford to purchase a home at a more realistic levels ($500 to $600k bracket). Sure a few money launders will get through but we'll pick them up later.

And as a Auckland home owner myself, I'm certainly not hankering for a crash as you so callously put it. I am however realistic about the situation, and realize that RE's will do and say anything to keep prices high no matter how damaging it is to the larger economy. Now that will ultimately result in a crash if prices were to continue at the massively over inflated prices.

Auckland very much does need a market correction for the long term, which we're currently seeing.

"That's ok, "tothe point" I'll get you to eat your words later."

I'm waiting, CJ099......

Keep growing that beard.

The Auckland market will continue to keep falling until to hits realistic price levels there's no doubt about that!
You still haven't presented any evidence what's so ever to prove that the market will start to increase??

All you can do is bluff like an RE! You even ignore the hard evidence of the large price drops from official sources such as the Real Estate Institute of New Zealand figures. How stupid are you?

Do you really want to see FTB's get in to massive debt and negative equity, causing them to loose their homes and NZ to go in to a recession, because that's what you are setting them up for be encouraging people to buy in a very obviously falling market!

It is uncertain if Auckland market will fall by much , stall or keep going up at a slower pace. What is certain is that CJ009 & friends will keep blaming the money launderers , the foreigners , the Nats , the "speculators" and the tooth fairy for their broken dreams ( which they think are actually an entitlement ) ; keep it coming guys.

Well just remember, I can at least dish up the evidence to support my argument. All you and the other RE cronies can do is bluff and try to persuade new fools to burden themselves with impossible debt levels.

And by the way how about getting your facts right: I've never blamed foreigner as I am one myself! I do how ever blame 'Foreign Buyers' who are 'Non Resident Investors' there's a BIG difference there!

And you also missed out RE (Real Estate Agents) they are the biggest problem since they have no morals and are far worse than money launders. RE's are the ones breaking the dreams and spirit of young Kiwis!

Hm .. I wonder just what makes me an "RE crony" - is it disagreeing with you ?
I do not work in RE or anything related and do not have RE investments.

Simple it's because you act like one. RE's are hell bent on driving the market beyond any economic sustainable logic, causing banks to risk economic collapse and ultimately dragging us all in to a recession.

If you want to make a counter argument at least back it up with evidence otherwise your opinion is just invalid.

CJ099 .... "Sure a few money launders will get through but we'll pick them up later"

You must be joking

How many (property) money launderers have been picked up so far ... in the past 10 years?

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He said young buyers would probably convince themselves that it was not worth buying because they could see a fall in their net wealth on paper – "as if movements in such things are the key consideration when establishing a base for one's family".

I'm pretty sure losing equity right off the bat and potentially facing a mortgagee sale would be the biggest considering when buying a house, Mr Alexander; especially if you want to have a family.

Furthermore, his comments about FHBs are focused on the lower socio-economic areas of Auckland, where properties are "cheaper." The lower quartile house price in Auckland is still circa $700k, so if a FHB took his advice they would be saving the bacon of investors who paid too much for damp shoeboxes in South Auckland and be living surrounded by gangs, crime and poverty. A perfect place to raise children!

Finally, it would be remiss of me to forget to mention his golden wisdom of buying meth houses to do up and live in, or to buy a section, live in a garage and build a house over several years as you can afford materials and labour. No mention as to the cheaper cost of living, higher wages compared to housing, push for home ownership, a lack of red tape, "jobs for life," cadetships/apprenticeships and wage inflation that young Kiwis have been denied. What a smart and insightful man.

I don't understand how people can read the majority of Tony Alexander's opinions and think "yea, this guys knows up from down."

Ask pretty much any of his contemporaries and the opinions will range from deluded to a perfect example of promoting the wrong man for the job.
Hell, even ask his boss what he thinks about the man. I doubt it would be a sterling response, as we saw but a few months ago.

Yeah plenty of people in the wings waiting for an opportunity, but who in their right mind would try to catch a falling knife? If those drops gain momentum, it will be the start of something much bigger - I mean who want to buy a very expensive house that is dropping in value? If that becomes the common story buyers tell themselves and each other, and that feeds into market sentiment, watch out...the same way people purchased in Auckland on the expectation of capital gains, will be exactly the same reason they won't buy in Auckland sentiment shifts when prices fall. The tide is turning in my opinion, but hey I'm not Tony Alexander and I don't work for a bank that needs more people to take on debt to make money.

Here's why the Auckland market is falling: The foreign buyers that were fueling price growth just dried up. This doesn’t change if a real estate agent tells you “they’ll find a way, they always do.”

Sloppy governments tried to pad poor economic growth by attracting easy money from Mainland Chinese buyers. Now that they’ve disappeared, governments are in for a rude awakening: The economies they’ve neglected over the past two years are in worse shape, as are the locals who tried to keep up with wealthy migrants by spending credit and accumulating massive debt. Now that those migrants are gone, all we’re left with is overleveraged locals, and a number of overseas buyers that will struggle to continue making mortgage payments.

Full article is here: Markets That Target Chinese Buyers Are Showing Cracks
https://betterdwelling.com/capital-controls-continue-halt-mainland-chine...

Maybe now is the time to get a good buy in Auckland.

Vancouver's housing market is rebounding sooner than expected

Isn't that what pretty much every economist predicted?

Hence why we all say that taxes aren't the answer; addressing the root issue is.

Demand is one of the root issues, and the tax has had an effect. That could just as well suggest more tax would have more effect.

Or may be not: Toronto Real Estate Agents Are Losing Their S**t Over These Charts
https://betterdwelling.com/city/toronto/toronto-real-estate-agents-losin...

Quote from a more recent article: Then I saw institutional investment advisor (and one of the best in the biz) Ben Rabidoux drop a five-year chart that really highlights how big of a swing this is. Toronto is seeing detached listings rise at a massive rate, while sales drop. The general public might not understand how important of an issue this is, but smart money has been taking note.

Yep...great info..a news site quoting a real estate firm. I'll take that with a grain of salt. Back to reality my friend, the markets rose with Chinese cash, and will reduce. without it. The only question is the degree.

They were backing up their claims with some statistics though. This from another article linked on that page:

Sales of detached properties in March 2017 reached 1,150, a decrease of 46.1 per cent from the 2,135 detached sales recorded in March 2016. The benchmark price for detached homes is $1,489,400 — a five per cent increase over February 2017.

It seems to be turning out a bit different to what people were anticipating. Same in Auckland with sales numbers and prices remarkably stable.

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Sales numbers in Auckland have collapsed Zach. The game is over Zach. The market has turned Zach. All credit data is pointing down Zach. There will be no soft landing Zach.

More than happy for the Auckland house prices to go back to 2012 level where house price-to-income ratio was around 5:1 ; and I think it is fair for all generations. To buy an average home in the current Auckland market and pay over 10 times the average income is over the top. How many of the locals and us hard-working Kiwis can honestly afford that?? Something is wrong and something needs to change, and change FAST!!

So you are saying that there is no chance of making money in the Auckland property market from now on? That will be bad news for property developers. So no new supply of houses? Hmmm, that should keep demand high and supply low methinks. Clever folk can still make money. Maybe not as much as before but there will be opportunities.

That doesn't necessarily follow. It should be possible for a property developer to make money in most market conditions excluding certain types of rapidly falling markets, in which case it can be hard to make a reasonable business case towards future profits within a set time frame. A property developer certainly shouldn't base their business case on always being in a rapidly inflating housing market.

Land value is a huge issue in Auckland, so as house values go down, so will land values, so one major outlay for a developer is reduced. Land value may go down even more on percentage after a bubble pops because land banking will be disproportionately disincentivised. A property developer can still make money by buying the land at a cheaper price and then adding value to the land with a house. Property developers who can use economies of scale, intensify developments etc, will certainly find opportunities for profit as land values deteriorate. Maybe even more so than in a land scarcity/highly competitive land purchasing environment/bubble, when the only way to add value to the land is very high end houses, which generally take longer to build and require higher building materials.

Also almost all NZ political parties have promised to build houses, so those projects may come on line anyway regardless of the temperature of the housing market, in addition to those who purchase cheaper land packages and choose to make value added profits.

Sales volume is a leading indicator... the combination of increased listings and reduced sales, well, if you are not very familiar with what this indicates, you should study the sales and listing values for the US back in 2005 and 2006. The fun aspect is that the "issues" show up in the most fungible properties (the low end of the market). If one looks at the typical RE silliness of "median sale price" as your metric you deserve your fate. First the issues show up in the low end of the market, which as the perverse result of increasing the median price due to the decreased sales in the low end of the market. It takes a bit for the median sale price to catch up with the median value.

Been there, done that, and even got a t-shirt.

PS "sales numbers and prices remarkably stable"... maybe if averaging over a couple of decades. Losing 5-10% of value in a few months is not remarkably stable in my view. YMMV

Makes sense .. but of course the analogy with USA situation circa 2005/6 is not a perfect one. NZ does not have non-recourse mortgages or (openly extended ) liar's loans ( yes I am sure there has been been abuse during boom years - but I doubt very much it is on nearly the same scale ) to name just a couple of differences . Only time will tell what happens here - but it is not going to be an exact rerun of US crash.

Yes, I agree about the analogy aspect. The primary item of interest that I was commenting on was Zachary dismissing the price reduction via quoting an increasing median price, along with a 46% (!) reduction in sales volume. There are lots of reasons for the bubble occurring in the US, one of which was the ninja loan. A lot of the reason was greed, as many people found it seductive to treat home ownership as an investment in a rapidly rising market. It was great for the economy as people would just refi when the property value increased and largely used the cash from the refi to finance a lifestyle that was beyond their income. When the music stopped, well, things unraveled.

Back to the point I was making, sales volume is a leading indicator, which is shown in numerous property declines. Not just the US crash, although it was an easy to find reference. First, sales volume declines, starting with the lower end of the market. This translates upwards on the property ladder, but this takes time. Due to the time lag, median sales prices can actually increase while the values are decreasing. The key is the sale volume, particularly if listing volume is increasing while sale volume is decreasing.

I'm pretty sure a sizeable percentage of NZ-ers have been using refi to extract equity from their homes during this boom. Many have chosen to use the equity to buy additional houses, some have blown it on cars, boats and holidays. Household debt to income levels in NZ are absolutely eye watering.

Hard to argue with what Yankiwi points out - a drop in sales is a clear leading indicator for price declines , and the examples are many. Predicting things ( the likely extent and the pace of the declines ) gets harder from there on which is what I was trying to say when bringing up differences between NZ and USA pre-GFC.

I am sure that many people have refinanced to fund their lifestyles as you say - but I do not know if that left ( or will leave ) them unable to pay their mortgages ( again - unlike in the US we did not have large scale ARM lending here ). A steep rise in interest rates would trigger mortgage defaults - but it is hard to believe the powers that be will have the guts to let it happen.

It's worth remembering that only 11 US states had non-recourse mortgages. Some of the biggest falls in house prices were in states with full-recourse mortgages.

interest.co.nz comments section is the best!

For someone named "tothepoint", he seems to completly miss the point over and over again. Spews out very generic bs with no sense whatsoever. Sounds like a recycled horoscope reading from a Real Estate agent. No stats or news links to back up as "evidence".

At least my boy Zachary has provided a "news" link with his comment. Not sure if the source is reputable, but at least it's a start.