Auction numbers remained on their winter lows at Barfoot & Thompson's latest auctions

Auction numbers remained on their winter lows at Barfoot & Thompson's latest auctions

Things were slow and steady in Barfoot & Thompson's auction rooms in the week from 22 to 28 July.

The agency, which is the largest in the Auckland market, marketed 73 residential properties for sale by auction last week, compared to 69 the previous week and 70 the week before that.

However, the sales rate has been steadily declining, from 39% sold  in the week of July 1-7, to 30% sold last week, although that was above the 27% that were sold in the last week of June.

At the big auctions, where at least 10 properties were offered, the sales rates ranged from 20% at the North Shore auction to 31% at the Manukau auction (see table below).

Individual details for all the properties offered are available on our Residential Auction Results page.

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Barfoot & Thompson Residential Auction Results 22-28 July 2019
Date Venue Sold Sold Post Sold Prior Not Sold Postponed Withdrawn Total % Sold
22-28 July On-site 2     1     3 67%
23 July Manukau 3 1 1 10 1   16 31%
23 July Shortland St 2 1   1 1   5 60%
24 July Mortgagee/Court 1         2 3 33%
24 July Shortland St 2   1 8 2   13 23%
24 July Whangarei       1     1 0
24 July Pukekohe 1     4     5 20%
25 July North Shore 3 1   15   1 20 20%
25 July Shortland St 1   1 3     5 40%
26 July Shortland St 1     1 1   2 33%
Total All venues 16 3 3 44 4 3 73 30%

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47 Comments

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11
up

still crap clearance rates!

17
up

It's getting ever harder for vendors to get that equity banked. Property is notorious for being illiquid when one needs to sell. We are just entering a prolonged period of such times when only deep discounts will make higher clearance rates possible.

"when one needs to sell"

Despite worsening economic sentiment, employment is high, GDP growth is reasonable and interest rates are incredibly low. Vendors don't sell for cheap unless they are forced to. Under current conditions, very few are being forced to, so they aren't.

13
up

Unemployment is now starting to rise and business confidence is collapsing. Its going to be a prolonged slump. Vendors need to sell eventually, anxiety will drive it. Sell today or risk getting much less tomorrow. It is what it is.

You're a real ray of sunshine

Really?, do you find the possibility of genuine buying opportunities in the future too depressing?

"Buylowsellhigh"

What is really happening out there is that despite worsening sentiment, employment is high, GDP growth is reasonable and interest rates are incredibly low. You choose to focus on the first point and ignore the rest. For you lot buying opportunities are forever on the horizon, like a mirage.

Edit: Please have the common decency to mark your comment as edited if you're going to totally re-write it after I've already responded to the points raised in it. And I'm not BLSH, that guy was an absolute nutter.

Prices have further to fall and a growing proportion of vendors/buyers know it.

The reset has begun. It's a healthy development. Either you can adjust while there's still time or risk becoming insolvent.

Poppy, when it comes to insolvency the two factors for me would be falling rents and a significant rise in interest rates. Despite your proclivity for mental gymnastics, we both know there these two factors are headed. Up for the former and flat/falling for the latter.

Due Diligence,

Sounds like you could be a full time professional in the residential leasing business with cashflow positive properties.

Are you borrowing on retail terms or business banking / commercial banking terms?

1) interest rates rising
2) rents falling

Those are the two factors that increase the insolvency risk of a cash flow positive property investor with a reasonable amount of debt relative to property value. For some property investors, there is another potential one out there depending on how you financed your property purchases.

From a broader market perspective, from 2008 to 2012, there were falling interest rates and rising rents in Auckland, yet there was a significant jump in mortgagee sales. That would suggest a large number of other property owners may be vulnerable to factors other than the two cited above.

Due Diligence ... interest rates are low because of negative sentiment not “despite” it. Low interest rates are a chosen bail out not a function of free market will.

Interest rates are low primarily because inflation is below 2%

...from interest.co.nz this morning " Given both the New Zealand and Australian economies are in a relatively healthy state, it is unclear why these monetary authorities are choosing to fire their limited ammunition now"

Note the key words "fire their limited ammunition now"

Due Diligence, your understanding of the bigger picture is best described as "shallow"

I don't think it is that unclear - they want to keep inflation closer to the 2% midpoint of their target range.

As for ammunition - https://www.rbnz.govt.nz/-/media/ReserveBank/Files/Publications/Bulletin...

If the experts say the reason for pre-emptive cuts are "unclear", then it's obviously "unclear". Perhaps there's an air of paranoia that we are one downturn away from "Japan style" deflation. Cut rates too far and safe deposit boxes could easily become the investment of choice. Banks will still need to offer a rate in order to attract funds. Its naive to assume smooth sailing. It's more likely to be a minefield riddled with unknown consequences.

https://www.stuff.co.nz/business/114328314/when-interest-rates-fall-belo...

And.....
Inflation is low because the economy is weak.

Because your disposition literally changes your point of view. Like two people watching the same situation from different angles, yours would be with blinkers on

He's simply facing up to the reality of the economy.

In Akld where the market has turned and is slowly retreating, its time to think about taking your profits.

If you purchased 10 years ago you will still probably be we over 100% if you sell 15% under RV. So every seller has a different perspective.

Few are forced to sell but around 15% are finding it hard to service their mortgages, so why not exit before you lose a large amount of your equity.

For every home owner there is a different story

Anyone who has bought in last 4 year is facing the music, specially if bought for fast money and do not have deep pockets to hold (Few excepation who got a deal but deal during that time was a ararity) and this is when the interest rates are so so low. So one can understand, how bad the market is and going to be.

FHB should be aware and buy with caution.

So prices are already falling in an environment where continued rate cuts, high immigration and high employment should all be supporting the housing market.

Normally price falls in a housing market are triggered by rising rates, increasing unemployment or falling population.

The real concern is that prices are already trending down when all of these factors should be supporting prices... what will happen if unemployment rises, rates increase or immigration drops?

What indeed. A much speedier return to long term kiwi wage based affordability.

12
up

went to any auction on Sat (Seller already bought), CV 950, agent stated feedback 850 upwards..

on the day, top bid 760, vendor bid 785 and accepted offer very close to 785.

Dgm, I remember going to an auction in 2016 when it was the opposite. Agent feedback low 800s, CV well below that, sold for 950 something at auction.

Domino effect to kick in. Earlier it was the other way round - up Up UP and now will be Down Down Downer

Yep. Shocker.

get your roller skates on..

Early spring!

10
up

Auction in Orewa June 9th six for sale. None sold. None met reserve

That's going to make for some interesting post auction discussions as the penny drops.

New builds?

Lots of them popping up all over the Country.

Swillwater up by Orewa seems particularly overpriced for its location and spec.

Agree. I pick trouble for that one.

Auctions are a miniscule figure of the available stock .Are auction sales representative of the market? 2 properties on auction.Both sold.Want to crow about 100 % success rate?

Family members just sold in Hamilton. Listed Monday two offers at the top of expectations, contracted a week after listing. Unconditional 10days later.
23% capital gain over 3years.
I'm a DGM but there it is.

That's why anecdotal stories are not reliable.

Be careful you may lose your DGM membership, we only want stories that confirm the "crash and burn" narrative.

Isnt Hamilton the new Auckland??

Sleepy Head making big plans... and today another company moving from Welly to hamilton...

a satellite town for sure

The rats are jumping ship now
Auckland apartment site being offloaded for less than half purchase price
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=122...

There was another example of a development in West Auckland being dumped at the same time

Or perhaps Chinese controls caught up with this developer. Get the money back...or else. Some pretty tough "or else" options over there.

I think we need to look at the total number of houses that went up for auction in Auckland. The total number of 73 is so low its now a poor sample size for what is actually selling on a weekly basis. Auction is no longer the way to sell your house, it works when the market is in a feeding frenzy, I stood and watched a few during the market peak and it was crazy times. I now see "Expected" prices at auction listings that are way over RV and one can only assume the RE got the listing by telling the vendor that that is what they could get at auction for it. When it fails to sell at action because nobody even turns up, it's time for a reality check.

Barfoots dominate the Auckland housing market, auction is still a significant portion of the route which their new listings take. Given that Barfoots sales per week are averaging only 140 for the first six months this year, any auction sales are quite significant and a timely indication on the continued malaise .

"Things were slow and steady in Barfoot & Thompson's auction rooms in the week from 22 to 28 July"

Seriously was slow and steady or was Bad as before.........lol

Keep up the doom and gloom, you are doing a great job for the successful property investors that rely on yield.
Prices are holding up very well in Christchurch so it is time to hammer it, so that we can buy even better.

What a ridiculous comment.

While prices are high you are looking to buy more...

TM2, Christchurch properties? they're fast running out. Soon there will be none left ;-)

FYI, a valuation comparison of residential property located in Auckland and Christchurch:

1) Auckland - house price to income ratio range is 8.2 - 9.9x, gross rental yield ranges from 2.1% - 4.5%.
2) Christchurch - house price to income ratio is 4.94x, gross rental yield ranges from 5.8 - 6.4%

Refer:
1) https://www.interest.co.nz/property/house-price-income-multiples
2) https://www.qv.co.nz/property-trends/rental-analysis