Strong lift in sales ratios at latest auctions

Property

Lower interest rates may already be affecting buyer turnout and confidence at residential property auctions

16th Aug 19, 9:55am by Greg Ninness

The number of properties up for auction remains at winter lows but there has been a significant increase in the percentage of auctioned properties being sold.

In the week from August 4-10 interest.co.nz monitored 131 auctions, which was more or less consistent with numbers over the last few weeks.

However of those 131, sales were achieved on 79, giving a sales clearance rate of 60%, compared to sales rates of under a third common over winter.

Prices also seemed reasonably firm with 57% of the sold properties selling for prices above their rating valuations.

Auctions are generally scheduled at least a month in advance to allow time for organising and implementing a marketing campaign, so it is still too early for the recent cuts in mortgage interest rates to be having any effect on the number of properties being auctioned. The rate cuts may, however, be affecting buyer confidence and turn out.

At the latest Ray White City Apartments auction on August 14 there was one of the best crowds in attendance that interest.co.nz has observed for some time and they weren't shy about bidding.

The five properties on the Order of Sale were a mix apartments that would have appealed to investors and owner-occupiers, with one of them being sold prior to the commencement of the auction and all four of the others attracting competitive bids before being sold under the hammer.

It is too early to say this indicates an upturn in market activity, but with spring just around the corner the lift in sales could be a promising sign that the market may be preparing to start climbing out of the winter doldrums.

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

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61 Comments

by gingerninja | 16th Aug 19, 10:04am 1565906683

** braces for impact**

by tothepoint - d… | 16th Aug 19, 10:12am 1565907146

Yes - there are emerging signs of a lift in Auckland housing market activity - and perhaps house prices.......

Are we seeing an early-Spring?

TTP

by Fritz | 16th Aug 19, 10:53am 1565909596

Maybe.
Too early to call. Let's see in a month's time.

by Market Interest | 16th Aug 19, 11:07am 1565910422

Wouldn't that just be regular on-time spring?

by Cowpat | 16th Aug 19, 1:28pm 1565918888

Toothy, do you or Greg have the separate Auckland numbers ? Kind Regards

by theglc | 18th Aug 19, 9:30am 1566077440

You called an early spring this time last year! and that was a giant fail!

You have no credibility.

there is an old saying "one swallow does not a summer make", so dont yet too excited old fella

by HeavyG | 16th Aug 19, 2:15pm 1565921714

Dead cat bounce. That 70% crash is just around the corner.

by tothepoint - d… | 16th Aug 19, 3:07pm 1565924825

Hi HeavyG,

The cat is alive and well.......

Just waking from a lengthy slumber.

TTP

by Jaf | 16th Aug 19, 10:09am 1565906992

Interest rates may be slashed.But, try walking in to any of the major banks & applying for mortgage. Its a different storyline altogether.Rather more stringent application of income requirements compared to what it used to be.And even when approved, the amount may not be sufficient to buy the property one has in mind

by tothepoint - d… | 16th Aug 19, 10:21am 1565907674

Hi Jaf,

Despite tightened bank lending criteria, the evidence above and elsewhere, is that people are managing to get the money - and often sufficient money to pay over RV........

TTP

by BadRobot | 16th Aug 19, 10:33am 1565908410

“Statistics are like bikinis. What they reveal is suggestive, but what they conceal is vital.”

― Aaron Levenstein

by Glitzy | 16th Aug 19, 11:40am 1565912445

REINZ should publish that quote with every press release.

by Advisor | 16th Aug 19, 10:33am 1565908422

That's right. Foreign buyer ban and reduced permanent migration may have taken the heat off the housing investment market but temporary migration levels are still high, with most new arrivals heading straight to our major cities.
This is putting an upward pressure on rents and at lower interest rates, mortgage payments for those with a deposit saved up could be cheaper than rents.

by mikekirk29 | 16th Aug 19, 2:19pm 1565921975

True mostly but unfortunately the assumption is still there in your remarks , that those immigrants are de facto, buyers.
I question that, due to their average ages and incomes and fact that most have people to stay with on arrival, so rent for quite a while.
Renting, I am afraid, is now by far the most common attraction to people under 35 in Auckland and this will only increase.
Owner occupation will continue to fall, in % terms unless and until decent houses are built for sale at under $650k in Auckland with 3 beds and that requires State intervention. State will not intervene because it would lower house prices if there was more of what is wanted being built. And that price reduction on their "asset" might cost votes. result: stalemate

by RickStrauss | 16th Aug 19, 3:28pm 1565926122

Three out of the top four skilled migrant categories are cafe ans restaurant, retail and chef...How could those folk not be buyers of million dollar houses?

by bw | 16th Aug 19, 11:12am 1565910734

Why on Earth would anyone buy at the moment, when every indicator tells us that we are headed into economic trouble?
The very nature of lower and lower interest rates tells us that the underlying asset to debt is almost certainly likely to fall.
Saving $500 on your weekly loan payments thought lower interest is fine and dandy, but when your property ends up falling $1,000 per week ( and that's not much if it gets going - $100k on a $1 Mio place per year ) and after two years, come renegotiation time, you may have saved and banked $50k off the loan principal but the collateral has fallen by $200k. There's another $150k to find in 'roll-over collateral, and if you don't have it - no rollover for you! ( NB: Rollovers are not fait accompli. Each fixed period is a specific Term Loan that matures, and has to be 'repaid' and a New Loan issued. Usually that principals net out, but if more collateral is needed - it is asked for)

by Due Diligence | 16th Aug 19, 11:29am 1565911787

I would buy at the moment because it is a buyer's market. And I'm in it for the long term, as opposed to trying to time the market perfectly for quick wins.

You say "the very nature of lower and lower interest rates tells us that the underlying asset to debt is almost certainly likely to fall." What do you mean by "asset to debt"? Lower interest rates put upward asset prices. I'd be much more concerned about asset prices falling if interest rates were rising.

by tothepoint - d… | 16th Aug 19, 11:21am 1565911312

Hi bw,

Anyone who assumes that their property will "end up falling $1,000 per week" would be unwise.....

The converse is more likely.

TTP

by bw | 16th Aug 19, 11:28am 1565911691

Maybe.
But think about it rationally.
Interest rates are being forced down - why?
Because the underlying trend or forces is for asset prices to fall.
That's why 'they' are trying to keep things' stable' with lower interest rates.
But it doesn't alter the fact that the underlying trend is - down.
There's more to it than that, of course, but just on a simplistic level - rates go up when asset prices are going to go up, and they fall when the opposite holds true.
Buy at your peril, as I suggested on another article because the RBNZ isn't doing this to keep homeowners/buyers happy, it's doing it because far larger entities are in trouble, and that affects/is going to affect all of us.

by tothepoint - d… | 16th Aug 19, 1:16pm 1565918201

Hi bw,

Please note that asset prices have started to RISE because of the recent FALLS in bank lending rates.

This effect is totally logical.

TTP

by Dogboy | 16th Aug 19, 11:51am 1565913116

Really? Look beyond the trees, you might just see the forest

by mikekirk29 | 16th Aug 19, 2:09pm 1565921392

Sorry but prices are falling in Auckland, not rising.
And see my stats on real sales below

by Due Diligence | 16th Aug 19, 5:12pm 1565932323

Yes (sort of), but may I refer you to the title of this article.

by CJ099 | 17th Aug 19, 7:12pm 1566025967

Yeah I can see that every time homes.co.nz emails my monthly property value to me for Auckland :_( .

by stuart786786 | 16th Aug 19, 5:13pm 1565932390

Who is wise and who is not only time will tell.

Wait and Watch.

I think by arguing so hard and trying to prove that everything is fine and house price will go up in this market, is just trying to convince self than other.

All indicators indicate that the situation if bad and falling interest rate, though good but suggest that ecenomy is about to go for a toss but no harm in wishing aloud, if it helps to calms one nerves.

by gingerninja | 16th Aug 19, 1:02pm 1565917355

We bought a few months ago (although renovating and not able to move in yet) partly because it was a buyers market and we were able to get a discount. We didn't need a mortgage, so that particular risk wasn't there. There was a long period of time when other investments made it better for us to stay renting, but when it was clear the business cycle was on the decline, we cashed up... after that leaving huge piles of cash in the bank not earning much interest and paying rent no longer added up and it became a much better proposition to buy.

Yes, we played the game of trying to time the market a bit and I know you're not supposed to. But we also earn in GBP and the risks with Brexit had become ever higher, that we just really wanted to reduce our risk exposure overall BECAUSE of the storm clouds on the economic horizon.

by tothepoint - d… | 16th Aug 19, 1:33pm 1565919206

Hi Gingerninja,

I think you timed things really well - and better than I probably would have done if in your position. Well done!

Certainly, I'd rather have money in property than cash in the current economic climate.

TTP

by Glitzy | 16th Aug 19, 11:39am 1565912370

There is nothing quite like a false dawn.

Back in the real world the NZ 2033 issue trades at 1.15%, 7bps lower than yesterday which was an all time low. US 10 year through 1.52%.

by Houseworks | 17th Aug 19, 12:05am 1565957145

If NZ2033 is 1.15 % and OCR is 1 % that is not inverted is it

by JohnSilver | 16th Aug 19, 11:55am 1565913327

"Lower interest rates may already be affecting..."

Lower rates are more or less predictable (fixed) for 1-3 years, while buyers will have to pay out for 30 years. I doubt that .25% affects buyers sentiments.

by Fritz | 16th Aug 19, 12:14pm 1565914460

Market sentiment is flakey, psychology is important. The hype around lower interest rates might have had an impact. But it might be temporary. The reality does not match the hype.

by alittle | 16th Aug 19, 12:20pm 1565914832

Boom Time :)

Is it ?

by richard1965 | 16th Aug 19, 12:26pm 1565915165

Vendors Expectation also changing and ready to meet the market !

Time for all those vendors who do not have holding capicity even in this low interest rate scenarion - to use this window to offload the properties and free themselves.

May be the last chance.

by Yvil | 16th Aug 19, 3:10pm 1565925050

I get your point about vendors becoming more realistic, implying lowering their price… But the fact that "57% of the sold properties selling for prices above their rating valuations." doesn't support this view

by GGP | 16th Aug 19, 3:32pm 1565926379

The other 43% were more realistic, hence the boost in successful sales numbers.

Correct me if I'm wrong but it also looks like the CV used to compare against sales price is the 2017 one (just looking at the auctions page). Aren't there 2019 valuations now to run the comparisons against?

by Due Diligence | 16th Aug 19, 7:01pm 1565938918

Every vendor that sold a property had a realistic price. If their price was unrealistic they would't have sold.

by GGP | 16th Aug 19, 9:30pm 1565947820

Yes, but if every vendor set CV as their reserve price, those 43% would not have sold. So those 43% that became more realistic about price increased the quantity sold.

by Due Diligence | 17th Aug 19, 1:46pm 1566006373

By that logic a vendor that lists their property for 50c is being very "realistic". In reality 50c isn't anything close to the realistic market value that is achievable.

It could be that buyers are becoming more realistic, pushing up the % that sold above CV.

by HeavyG | 19th Aug 19, 9:13am 1566162787

They are using the 2017 rateable values (some call them the CV = council valuations). These are only done every 3 years so next one for Auckland is 2020.

by RickStrauss | 16th Aug 19, 3:34pm 1565926453

Usually Interest says "where pricing information was available and could be matched with RV" so it would be interesting to know across how many of the sales this was the case. Reading through the listings showed many of them without the information.

by tothepoint - d… | 16th Aug 19, 1:35pm 1565919355

Hi alittle,

Who, other than you, is talking of "Boom Time"?

That's blatant spruiking.

TTP

by mikekirk29 | 16th Aug 19, 2:07pm 1565921275

Anecdote I am afraid, and local results in one week, doth not a summer make.
Residential only sales in Auckland 2008-09 (24m) were 1640 pcm (39,360 for the 2 years)
In first 7m of 2019: 1550.
In 2012 first 7m = 2266 pcm.

Like stock market, RE in Auckland will probably not trough (re sales) until it is 50% down on previous high.
You can ignore 2014-16 because extra buyers at inflated prices were foreign.
Now, we are reverting to 2012 market but without 2012 prices.
So, sales will keep declining until prices decline too, by at least 25% from their peak.
Average sales pcm from 2012-18 (84m) was 2190 pcm.
So, as we are currently running at 1550 pcm, this is NOT the recovery point, sorry.

by Market Interest | 16th Aug 19, 2:37pm 1565923046

I do note that on the weekend just gone the number of attendees at the open homes I visited in the central suburbs was markedly up on the few months prior. And the agents seem particularly bullish on price expectations, whereas I had some scepticism expressed previously also.

Of course weeks will go by to see whether or not that translates into genuine interest, but a sign of lifting activity.

Do you get to see the figures as they come in? Or do you have to wait for the data to be submitted/published by REINZ?

Admittedly I would tend to agree - I don't see a shift in the fundamentals - but will be very interesting to see.

by mikekirk29 | 17th Aug 19, 5:46pm 1566020772

Figs for July not final til day REINZ release but usually revised up a bit in subsequent months

by Laminar | 17th Aug 19, 2:33pm 1566009197

@mikekirk29 thats a keeper, i love collecting up the calls for -50%, screen snap and saved to docs. Good luck on your call!

by mikekirk29 | 16th Aug 19, 2:15pm 1565921710

By the way folks: a "buyers market " exists surely, when buyers are increasing in number due to the attractions of what is OTM. In fact, sales continue to decline in Auckland and what is on offer is not sufficiently often where and what buyers want. Buyers are not a uniform block: some have plenty of cash and do not need mortgages. Some cannot get a mortgage. Some would be happy to start with an apartment and others need a 3 bed at $650k. Buyers current psychology is as far as I can gauge:

1. Prices will go lower, so I will wait til they do
2. World economy looks shaky and banks desperate to lend but tightening up on expenses checks
3. It is too expensive at 5 time earnings or more.

by blowjoy | 16th Aug 19, 3:04pm 1565924683

4. when a whether-tight good-school-zoned centrally-located property is listed, will get that no matter what, given the housing stock with generally abysmal quality, dropping public education quality (make sure kids would not end up in UoA), increasing congested Auckand. Focus on the long term. Buy but buy wisely.

by Foreign buyer | 16th Aug 19, 3:06pm 1565924803

Lots of Aucklanders made on average $400k on their houses between 2012 and 2016. They then used this money to buy second homes in places like Tauranga where prices went up then on average $300k for very average houses. They are now trying to sell. The clever ones have already sold and made enormous profits. The others are now seeing their massive profits drop. If Homes.co.nz had not cynically just extended their sold 'red dots' time period to 1 year from 6 months (to show more sales) there would be hardly a red dot in site. Tauranga is in trouble and I predict this market will be the first to collapse.

by Yvil | 16th Aug 19, 3:13pm 1565925237

Thanks for your opinion, did you read the article above?

by THE MAN 2 | 16th Aug 19, 4:05pm 1565928354

Currently Banks are still using 7% P&I or more for the debt servicing, and when that is reduced which it will be, it will be far easier to to borrow money on mortgages.

I believe Oz has dropped their rate for servicing to around the 5% mark!

by Carlos67 | 16th Aug 19, 4:21pm 1565929288

Hey Foreign Buyer, I have been looking to buy in Tauranga for months and have been watching the market very closely. Listings on Trade-Me are not dropping off my watchlist and many houses have been listed for months now. You have to admit however many are still $100K to $300K OVER the RV. I have a couple that are on RV and one is even below RV but its not moving. One of the issues down there is a boom in low cost new housing in the $550K to $650K area so the million dollar places are not moving.

by Carlos67 | 16th Aug 19, 4:16pm 1565928988

Housing boom until Christmas guys. Lower rates and the suggestions of even lower rates for the foreseeable future is all it needed coming out of Winter. Pent up FHB demand, people are finally taking the plunge and why wouldn't you ? Its the known vs the unknown that may not happen anyway so place your bets in a house.

by i am not a nimby | 16th Aug 19, 5:02pm 1565931779

Time to buy is NOW as it was in 2008/09. Time to buy is when "Gurus" and "economists" say not to buy.

by tothepoint - d… | 16th Aug 19, 5:15pm 1565932546

Hi nimby,

Rule for Success in Property Investment:

Listen very closely to what leading economists say.......

And then do the opposite.

TTP

by Nzdan | 16th Aug 19, 6:41pm 1565937663

Westpac economists reiterate forecast of 7% house price inflation next year

by Pragmatist | 16th Aug 19, 7:37pm 1565941070

So a fall of 14% then? :)

by THE MAN 2 | 16th Aug 19, 8:01pm 1565942505

MikeKirk, very hard to believe that you are a real estate agent the way you talk!
If you are a current agent, how many listings do you currently have, and are you getting much enquirey on them?

by Houseworks | 17th Aug 19, 12:16am 1565957809

The Man. You used to sell real estate I think?

by mikekirk29 | 17th Aug 19, 8:15am 1565986525

Check the register my good man.
Free public access

by gordon | 17th Aug 19, 10:24am 1565994286

“Enquiry” The Boy, not enquirey. I can see why you are an agent.

by Laminar | 17th Aug 19, 2:48pm 1566010112

lol, saddest insult ive read today, well worth a slow clap.