Sluggish Auckland market dragged auction numbers down in May

Property

Auction numbers are down on a year ago although sales rates and selling prices appear less volatile

8th Jun 19, 6:02am by Greg Ninness

Residential auction activity was more subdued in May than it was in May last year, particularly in the sluggish Auckland property market.

Interest.co.nz monitored 952 residential property auctions throughout the country in May, down 16% compared to the 1128 that were monitored in May last year using the same methodology.

However the lower number of auctions was almost entirely due to fewer homes being auctioned in Auckland, with the number of Auckland auctions monitored in May being down 24% compared to May last year. But there was less volatility in sales clearance rates.

Of the 952 auctions around the country that were monitored in May, sales were achieved on 339, giving an overall sales clearance rate of 36%. That was down from 41% in May last year.

And prices were fairly evenly divided between those that sold for more or less than their council rating valuations (RVs), with 47% achieving prices that were higher than their RVs, 51% selling for less than their RVs and 2% selling for the same as their RVs.

We are unable to make comparisons between selling prices and RVs from last year's auctions because this is a relatively new feature in our auction reports.

At the Auckland auctions that were monitored in May, sales were achieved on 32% of the properties, down slightly compared to the national sales rate of 36%, and also down from the the 36% sales rate at Auckland's May 2018 auctions.

The number of properties selling for more than their RV was also lower in Auckland at 41% last month, compared to 47% nationally.

Details of individual properties offered at the auctions monitored by interest.co.nz, are available on our Residential Auction Results page.

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41 Comments

by stuart786786 | 8th Jun 19, 6:16am 1559931364

Most people are streching to buy than before as getting good deals in those price range so median price will not give fair picture.

Like it or not, ground reality is that market is falling and is on for a long winter (few years)

by richard1965 | 8th Jun 19, 11:09am 1559948949

Agreed and this is because house at low end have not fallen as much as 900s to million $$$$$ Plus houses have fallen which are beyond the reach of FHB.

In Auckland normally FHB are finding it hard to stretch above 800 to mid 800s so houses in that range have fallen but not as much as houses in higher range where FHB buyers are not able to reach.

Trickle-down effect is inevitable so just wait and watch.

Media and all expert have job to do so every other day will come with Boom and Doom articles and all data will discussed and should be but the reality of Very Long Winter in housing market cannot be denied and is a reality.

by hemihua | 9th Jun 19, 9:39am 1560029998

"Don't worry, we've changed the benchmark of affordability so household income and 30 year mortgages are the new norm. Oh you wanted to have children AND own a house? Oops!"

by NorthernLights | 10th Jun 19, 4:01pm 1560139281

So First Home Buyers really have no choices than property in the $800,000’s ?
Even at $600,000 for FHB this is folly
There really is no way this Ponzi will be kept afloat regardless of all the talk of Auckland as some great city of gold

by Yvil | 8th Jun 19, 4:57pm 1559969875

Stuart, good on you for knowing better than Interest. Maybe you should start your own website, you probably will have many followers from this site

by tothepoint - d… | 8th Jun 19, 2:47pm 1559962065

Despite some people preferring to believe otherwise, prices remain pretty steady.

But rental yields are rising, so most property owners/landlords are happy to sit tight....... Longer term investors, in particular, have smiles on their faces.

TTP

by dictator | 8th Jun 19, 9:46am 1559943995

Rental yields are rising because of price falls. Also prices aren't steady they are either up or down, and aren't flat.

Which long term investors are you referring to? Long term investors that are starting out and ramping up their holdings want prices to fall. Long term investors looking to cash out soon want prices to go up. Perhaps you could give examples of actual people and why they are happy.

by richard1965 | 8th Jun 19, 11:15am 1559949344

Agreed that Rental yields are rising because of price fall and also many so called investors in past few years were speculators and were after fast money which has dried just like the so called investor.

One look at houses that are coming in market - if vendor has purchased in last few year will be hard for him to sell without a hit and the hit could be very bad (may be they should try to avoid RE agent if confident to do themselves and save anywhere between $25000 to $40000 and reduce the loss - should atleast try in this market or may be go through homesell as my friend just did and is very happy.

by tothepoint - d… | 8th Jun 19, 12:18pm 1559953093

Hi dictator and richard1965,

Sorry - but you guys show major bias.

Let's be objective:

Prices falls have been modest, to say the least.

The important driver of yields has been rent rises - which in percentage terms far outweigh price movements.

Go compare Auckland/Wellington city rents now - with what they were, say, 3 years ago and 5 years ago.......

And if you're still in doubt, go talk with any tenant!

TTP

by Houseworks | 8th Jun 19, 12:46pm 1559954810

Yes rent rises are across the board and becoming a trend. Like it or not many tenants are boxed in with higher rents and pricey houses. Too easy to blame the landlords. When the inevitable house price cycle restarts those who bought now will be more than happy they did.

by JimmyJames | 8th Jun 19, 2:18pm 1559960324

If “tenants are boxed in with higher rents and pricey houses” what will drive the next “house price cycle” restart?.

by Houseworks | 8th Jun 19, 8:03pm 1559981007

You have me stumped, what would you think

by JimmyJames | 9th Jun 19, 11:50am 1560037855

I don't believe it will restart. "tenants are boxed in", as you say. Foreign buyers are boxed out. Local investors were able to ride the wake of foreign investment/money laundering but I don't believe they can steer this ship from here. As you say houses are "pricey". Close to a decade of emergency interest rates are priced into the market . Adrian Orr is running out of fire power to bail out bad, socially unproductive housing investments. Use your words.

by Houseworks | 9th Jun 19, 9:06pm 1560071185

There are thousands of potential fhb willing and able to get on the property ladder. Then there are the next level, those who are not as organized but just as willing should property prices settle back. They provide market support as well. Not that many young people want to be consigned to a lifetime of renting pitfalls, chasing landlords to do maintenance (see below) or worrying about whether they will have to look for another rental before long.

by Pragmatist | 13th Jun 19, 4:25pm 1560399906

I think you overestimate the number of FHB that are "willing" to take on $700k+ mortgages to keep this property ponzi going.

by taimaiakka0 | 8th Jun 19, 11:30am 1559950259

" Longer term investors, in particular, have smiles on their face"

Long term investor will always have smiles on their face, Agreed but defeination of long term investor in current market has changed and all speculators (so called Investors) will be hit hard and go for hibernation as a result market is bound to be hit as it is those speculators who were paying obscene ampunt of money (May be Money Laundering) which was responsible for that unheard boom ($2000 to $4000 profit per week and may be more).

When checking history of some of the houses and the type of money that few vendors had paid in 2016 / 2017 is so high that they are bound to bleed if not have holding capicity for few years till the next boom.

Agree that long term Investors will have a smile on their face as this will also be an opprtunity for them to add to their portfolio :)

by theglc | 8th Jun 19, 11:38am 1559950730

Maybe outside of Auckland things are steady.... for now

But as we all know AKLD QVs are down, HPIs are down and sales are down,

So its all bad news for Auckland and it is staring to accelerate.
and
Some of the valuations on Homes.co.nz are plummeting down by 15 & 20% just this year.

It could crash by 50% and you would still be saying that prices are steady, the only person you are fooling is yourself!

by tothepoint - d… | 8th Jun 19, 11:59am 1559951989

Hi thegic.

You write above, "It could crash by 50%........"

I look forward to quoting you on that. (-:

TTP

by Fritz | 8th Jun 19, 12:42pm 1559954579

English isn't your strong point.

by tothepoint - d… | 8th Jun 19, 1:13pm 1559956388

Hi Fritz,

Fair point....... my English isn't my strong point. I'll take it on the chin.

Am working on my English - and trying to improve it.

Salutations,

TTP

by Voiceofreason | 8th Jun 19, 12:57pm 1559955424

It could crash by 50%, like Ireland and Spain after their bubbles, but that would be a real disaster scenario. If the Auckland market goes down by 25-30% though, over a period of 3-4 years, I won't be surprised at all. This would bring some houses back well below $500k, which is appropriate for NZ incomes. Apartments would be quite affordable.

by Yvil | 8th Jun 19, 5:17pm 1559971021

With a comment like that you should definitely change your name

by Voiceofreason | 9th Jun 19, 4:43pm 1560055416

It’s very reasonable to assert there’s a bubble. It’s pretty obvious.

by Yvil | 9th Jun 19, 6:30pm 1560061831

You said "It could crash by 50%" That's totally unreasonable

by Miguel | 10th Jun 19, 10:24am 1560119091

I think the important qualifier here is "could". I don't think he is saying it will happen, or is likely .... just that its a scenario that could occur.

The examples given (Spain/Ireland) had broadly similar macroeconomic elements prior to their crashes (high debt, low unemployment, high immigration, and house prices well above long term trends). Once prices started falling (triggered by GFC) it was then compounded by rising unemployment and people emigrating out of both countries.

Given a similar trigger event there is no reason it couldn't happen in NZ.

by Yvil | 8th Jun 19, 5:05pm 1559970331

"Maybe outside of Auckland things are steady"

Values are not steady outside of Auckland, they are rising

by tothepoint - d… | 8th Jun 19, 7:23pm 1559978623

Hi Yvil,

Yes - that's very clear from the data.

Look at Palmerston North, for example, where house values have soared over the last 3 years or so.

Those who took my advice of buying property in PN would have done very nicely indeed.

TTP

by NorthernLights | 10th Jun 19, 4:08pm 1560139683

TTP - so landlords who see the market value of their investment property declining is acceptable if they can increase the rent ?
You could get a job on the FED
Do a little money printing & later QE
Same result ultimately Bust

by Dgm | 8th Jun 19, 1:08pm 1559956125

Auckland housing market is a balloon that is without its inflator, for the last 18 months..

I notice there are few seeking a Give A Little page to buy one... until then it's bouncing on and off the ground like a lost planet

by Fritz | 9th Jun 19, 8:38am 1560026326

Sorry, bit off topic, but I thought some here might know the answer.
We are having ongoing issues with our broadband, since we moved into our rental property in January. We have lost service 3 times, and each time for at least 3-4 days. This causes a lot of inconvenience in terms of my children's study etc.
it seems like there is an issue with the fibre, last time Chorus came out and said it might be to do with how the fibre was laid under the shared driveway, which has gobi blocks.
Is it legitimate to ask for a rent reduction based on these ongoing issues? I view internet as an essential service in a property, and if there are ongoing issues that are not of our doing, then I am not convinced that we should be paying the top rental dollar that we are paying.
Any thoughts appreciated, thanks.

by tothepoint - d… | 9th Jun 19, 9:31am 1560029516

Not sure you can blame your landlord for this unfortunate matter.

But I'd certainly seek compensation from your ISP.

TTP

by Fritz | 9th Jun 19, 10:11am 1560031879

Thanks.
Although I heard the previous tenant had lots of issues too with broadband.
Regardless of who's responsibility, it means the property is sub optimal. Given that, I think there is a case for lower rent.

by Houseworks | 9th Jun 19, 12:49pm 1560041342

Fritz tell that useless specuvestor of a landlord to get his/her miserable greedy arse over right now. Then threaten him with non payment of rent until it is fixed immediately to your satisfaction which you could withhold for six months. Tell him you have rights and you might consider paying half the rent or you will report him to all of the authorities and the tenants association. That will get you urgent action for sure

by Yvil | 9th Jun 19, 6:37pm 1560062240

Fritz, I'm pretty sure you have made multiple posts every day this week, your broadband can't be that bad ; )

by tothepoint - d… | 9th Jun 19, 7:41pm 1560066062

Yep - if you think there's a reasonable chance that your landlord will pay compensation then go for it!

TTP

by house hunter | 9th Jun 19, 11:34am 1560036871

Interesting chatter about the possibility of 25% or even 50% falls in Auckland prices. I personally don't see that happening. My best guess is that the Auckland HPI falls another 5% (on top of the 4% fall we've already seen). I think medium prices will eventually "catch up" to HPI and we'll see the Auckland median settle back into the 750-800K range.

by NorthernLights | 10th Jun 19, 4:16pm 1560140207

House Hunter - pure speculation
If we really were sure of what you say to be true people would all be moving forward now at the Auctions
buying houses as fast as 2015
This is a different scenario in the Auckland property market cycle than previously
I shouldn’t have to state the differences It’s a foreign moneyed Ponzi scheme

by house hunter | 10th Jun 19, 5:26pm 1560144370

NorthernLights, the tone of your response does not make me confident that we can have a productive discussion so I won't bother responding further.

by swapacrate | 10th Jun 19, 8:25pm 1560155123

"Auckland median settle back into the 750-800K range."

When I look at these types of numbers my heart goes out to first time buyers.

What is the median household income?
How long will it take to save 150K 20% min deposit?
Will banks lend if median household income cannot afford to pay with interest rate rises?
In that time can couples have children?
How do people save in Auckland if rents are increasing?

If its to hard to live in Auckland and disposable income is poor, what is the best option for Aucklander's, move somewhere else in NZ, or to move overseas?
Can fluid technicians at petrol stations, waiters, chefs at the local curry house, students who top up our immigration afford $750K house and get a loan.

I seriously have my doubts that "Auckland median settle back into the 750-800K range.".

by house hunter | 11th Jun 19, 10:07am 1560204471

You might be right that it goes lower than 750 in which case I'll be the first one cheering. Feel free to offer up a more specific prediction.

by swapacrate | 11th Jun 19, 9:09pm 1560244162

Lets make up something then, TTP does it all the time.

What's Auckland's demographics by Income at a guess

Combined Income Annual

10% - $150K plus savings - $1000pw - 52,000 yearly

20% - $100K to 150K savings - $500pw - 26,000 yearly

40% - $70 to $100K savings - $200pw - 10,400 yearly

30% - 0 - $70K savings - $100pw - 5,200 yearly

$700,000 @ 20% - $140,000 deposit

52,000 140,000 3 yrs
26,000 140,000 5 years
10,400 140,000 13 years
5,200 140,000 26 years

70% of the population will struggle to save 20% at $700,000, if there were any shocks, and losses of jobs, divorces, kids sickness etc. Then its basically impossible for people to save this amount of money, if people live in Auckland.

My guess at a median is about $550K - $650K, so we still have a long way to go. I could be completely wrong, which wouldnt be the first time, but salary's have not increased much since houses were $550K - 650K so what has changed to make Auckland richer.

I think I was generous on 10% $150K plus