Fewer properties are being offered at auction but more are selling, suggesting agents and their clients are being more selective about which properties to put on the block

Fewer properties are being offered at auction but more are selling, suggesting agents and their clients are being more selective about which properties to put on the block

There was an interesting trend evident in the real estate auction rooms in the first week of spring, with the number of properties available down compared to the same week last year, but the number of properties selling higher.

Interest.co.nz monitored 145 auctions around the country in the week from 1-7 September, down 18.5% compared to the equivalent week of last year (2-8 September).

However the number of sales achieved at the auctions was higher this year, with 79 sales compared to 73 in the equivalent week last year.

That gave an overall sales rate of 54% compared to 41% last year.

That fact that total auction numbers were down on a year ago is not surprising.

According to the Real Estate Institute of New Zealand, the number of homes sold in August was at its lowest level in four years. And in the critical Auckland market it was at its lowest level in nine years.

But the fact that auction sales numbers were higher suggests at least part of the reason for lower overall auction activity is that agents and their clients are being more selective about which properties to take to auction and which properties to sell by other means.

Auctions can work well if the vendor has realistic price expectations and there are likely to be two or more potential buyers who could bid unconditionally at the auction. If the vendor has unrealistic price expectations or if potential buyers can only make conditional offers, such as being subject to selling their existing property, then a sale is less likely to be achieved at auction and a negotiated sales process may be a better option.

Of the 79 sales achieved at last week's auctions, 70 were sold under the hammer, seven were sold prior to their auction, and two were sold immediately after their auction.

Interest.co.nz was able to match up selling prices with rating valuations on 65 of the properties that sold, with 35 selling for more than their rating valuation, and 30 selling for less than their rating valuation.

Details of all the individual properties at the auctions monitored by interest.co.nz and the results achieved, are available on the Residential Auction Results page.

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Good information. As you note agents and clients may well be looking at different forms of marketing as the market is tending to move to a "more usual or normal state" possibly not seen for the past six to 10 years. The RBNZ will have been looking to this market stability.
Of some value is the number of properties selling above and below rateable valuable; however, as the data is nationwide this is not going to necessarily be relevant to a particular market such as Auckland.
However, what should be of note to buyers - and in particular FHB - is that the bubble burst predicted by many has not eventuated and it is now coming up to three years since the peak of the market.
Even in Auckland, while there has been some downward drift over the past couple of years this is not considerable and may not continue, and it is both off-set by falling interest rates and is within the range of being off-set by buying well.
Like the 74,000 FHB over the past three years, waiting FHB should be getting out there and seriously looking and, even in Auckland, doing so with good confidence as to the market and current conditions.
There is never any certainty that there is no risk of significant economic or market events, but if purchasers are able to service their loan (and banks have a far higher test than the actual current mortgage rate) then there is little to fear. It is noticeable that those DGM who were adamantly scaremongering with claims of a bubble burst of 30% and more have become very, very quiet.

"However what should be of note to buyers and in particular FHB", is that in the past 42 months , excepting one month, the current Auckland median price has not been lower. Since 1993 the percentage of Auckland home owners,( based solely on the current median price )who have not seen capital gain has never been higher.

Hi Cowpat
One’s first house is a home. The second and subsequent houses are an investment.
You don’t seem to grasp the implications of this simple principle.

That’s right. The doubling of equity in my first home over the past 2 years doesn’t change anything, if I were to sell up tomorrow I’d still need somewhere to live.

Yep, if you're moving in the same market, your lower end property that doubled in nominal value is still a lower end property (assuming you haven't sunk lots in improving it.), so your $X of gains is counterbalanced by the fact that next place you move into has probably gone up by 2 x X, so your debt increase will be just as large as if the properties hadn't gone up.

The consolation is access to good interest rates, having a decent equity buffer should the housing market drop and we can access it via mortgage top up if we need some emergency funds as a last resort.

Yep, all about living within your means and not overextending.
Just been out open homing in Auckland, and with crummy little 2 bedroom 1970s concrete block units starting at $630k... Ugh. Or move out to deepest darkest manurewa and get a run down 3 bedroom house for the same money, but have an hour of sitting in traffic morning and evening to get to work.

Well said printer8 !

I am surprised at how many (as a percentage) sold prior to the auction and I think that signals there is fairly strong interest from buyers and a healthy market. It also shows that vendors are being realistic in their pricing.

"there is fairly strong interest from buyers"
Anecdote:
I happened to be in an apartment block last week when an onsite auction was took place. About 50 attended, for a 2 bedder, across the road from the beach, freehold, built circa 2000, that the current owner paid $650k for in 2007. They hoped for $1.2m. Bidding stopped at $750k! One last vendor bid at $1.1m and now it's on the market now for $1.2m.
So buyers may be interested, but as you suggest, vendors may need to get a lot more realistic.

Sure vendors can be realistic but were there issues that held buyers back....built circa 2000 what were the issues with leaky building and water penetration. Or across from the beach, coastal inundation or probably a myriad of other downsides...buyers seem to focus on negatives unless there is strong competition.

Buyers weren't held back. Someone made a generous bid of 750k.

"Thanks" for your valuable contribution JimmyJames. Can I just ask one question, were you held back when you were at school?

23
up

You continuously resort to abusive and ad hominem comments. I really do hope the editors seriously consider the value of your ongoing presence on this forum.

You are taking it the wrong way pal. Thats not ad hominem that's banter to JimmyJames "generous bid" malarkey. As far as ad hominem goes you seem to be an expert Fritz along with your phoney predictions. Try to enjoy your Sunday before mondayitis arrives.

Person A: "someone made a bid"
Person B: "you are an idiot that got held back in school"

CLASSIC banter.

Edit "someone made a bid 50 percent below the asking price and Person A said that's generous"

It was clearly not a serious comment from JJ. I also didn't call him an idiot, my comment was a witty and admittedly harsh play on words. Sorry if any offence taken

Nope you're still a Troll form personal experience. Try adding factual arguments and evidence to your comments.

You property speculators think you'll are so superior in life, that you'll can say what ever and call it banter...

On the other hand we are pounced on if we stray a bit..

10
up

No, I was actually put forward a year for a few subjects. Your personal attacks come off as small minded and weak.

Houseworks =/= Investmentworks

Thanks Yankiwi.
Yes we have been lucky we made a few dollars from house and property for which we are grateful. As you know, it's a mix of taking risks, working hard and seeing value where others dont. We began reinvesting again in 2009 and virtually bought something every year since. So I still think there are good opportunities at times and as some others here have described.

Property is not the only show in town, and it seems fairly straight forward compared to a real business, unless your a property developer and you get money from investors as well as banks.

What's hard from my point of view when starting a business from scratch, you have to come up with an idea where people will pay money for something that is new and original (not easy), you need to present to investors and explain how your business can make money and whether they will make money, this is done with investment memorandum, forecasts, swot analysis, business plan, pitching deck, competitive analysis etc etc etc.

Then you need to market business if some how you get investors to believe in your idea etc etc etc. Lots of hard hard hard hard hard work. With a lot of risks, risks, risks................

Buying a property and selling one, is great, but its not exactly rocket science. Not knocking you or others, but the way you treat people based on you doing well, is not very nice, and its seems as if your banter only goes one way. A lot of people out there are working hard, and taking risks, maybe even riskier then you, but you don't see them biting people hands off.

Coming to your conclusion from 1 anecdotal auction is more bias than solid evidence

Sounds like a very reliable and factual account to me given that precise values of the bids have been referenced from a first hand account. This would only be undermined by someone who needs to ignore the truth.

Well said Jimmy :)

JJ, bw, CJ, you should learn that one sale doesn't make a market, I could quote any of the 35 sales that sold over RV in detail and come to the conclusion that the market is very buoyant, but that would be wrong, don't you agree?

35 sales is a drop in the ocean in comparison to all those selling below RV. Remember if it were a buoyant market and property prices were on the increase you would be seeing 1) A greater success rate in the number of properties being sold at auction and 2) Prices selling above RV consistently, that would also be reflected in sales not going through auction too. But as mentioned the REINZ data shows a price declining picture at least for Auckland. :)

"35 sales is a drop in the ocean in comparison to all those selling below RV"
No it's not, it's MORE than the 30 that sold below valuation, com'on, do you not think at all before writing absolute nonsense ?

Yvil you really are jigging madly on the head of a pin. That's 35 sales at "auction" above RV that not a suitable comparison to the hundreds of properties that are having to sell outside of auctions rooms, since the REA's know that don't stand much chance of selling those properties at auction. Given that the Sellers expectation will be to sell well above the current RV. To quote the REINZ; They said that 5959 residential properties were sold nationwide in August, the lowest number for that month since August 2014. In Auckland there were 761 residential properties were sold in August, the lowest number for the month of August since 2010. Sorry but I really can't see how a handful of auctioned properties gives a better comparison to the REINZ data. Here's the link again: https://www.interest.co.nz/property/101651/august-housing-sales-were-fiv...

Your link literally calls the market price flat in Auckland?

Yawn; There's plenty of other evidence to show that Auckland is a stagnating and declining market: QV figures show property values on a long slow decline in Auckland, starting to head downwards in several other regions https://www.interest.co.nz/property/101060/qv-figures-show-property-valu...

"Auckland is a stagnating and declining market" english is not your strength, which one is it? Stagnating or declining? If you don't know the difference you should abstain from posting.

Stagnating in volume, declining in price, I'm guessing was the intent.

CoreLogic last updated my home value estimate on 8/9 at 99.1% of CV, or $2,480,000. My recollection is unsure but I think that may well be the highest this year. Agent says properties are selling but not booming.

That's definitely up on what it was eh.

August and August YTD total sales numbers (not prices) seem to be pretty slow overall compared to the last decade though.

just remember when you're speculating on property, be careful when bidding..

https://www.stuff.co.nz/business/115786750/cancellation-after-buying-12m...

"According to the Real Estate Institute of New Zealand, the number of homes sold in August was at its lowest level in four years. And in the critical Auckland market it was at its lowest level in nine years".
Yep prices are continuing to decline 2 years since the peak of 2017, this is also happening in other countries that were very dependent on overseas money from China. Property will sell if the prices is affordable and realistic.

How do come to the conclusion "Yep prices are continuing to decline" when more houses sell above CV than below. There is nothing in the article above suggesting prices are falling.

You must be desperate to get back to those golden days..
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=122...

Maybe he has a memory of more than 30secs, and read yesterdays story about the REINZ monthly data....

Trolling again Yvil. Residential sales and prices are declining we can see that in the REINZ data, did you miss yesterdays article? I'll provide the link again for you below. Here's a quote from that article "In Auckland the median price was $820,000 which is exactly the same as it was in April 2016". That's quite a decline and shows that some places like Auckland prices are stagnating to slowly falling. And no the majority of properties sold are not selling much above CV as was revealed in the data. Auctions should be showing ALL properties selling above CV but they are not are they if the truth be told. https://www.interest.co.nz/property/101651/august-housing-sales-were-fiv...

I'm just going to quote you and leave it here for all to contemplate:

"In Auckland the median price was $820,000 which is exactly the same as it was in April 2016". That's quite a decline"…
"Auctions should be showing ALL properties selling above CV"...

You can Troll all you like Yvil but that's going to alter the REINZ data is it. We are in 2019 now, so the fact that Auckland's median property prices have slipped to 2016 levels shows stagnation and a decline. Or can you not see that 'Blinkers on again' or is that the only retort you can muster. :)

Stagnation: a state of not moving
Decline: decreasing, becoming smaller or reducing
So again, the fact that prices are the same in August 2019 than in April 2016 is not a decline as you claim above, is it?

If they move back to being the same as 1992, will you still say it's not a decline?

Love it, 1992 lol

Much as I'd like Auckland prices to be declining, I don't think the REINZ data actually shows that. The drop in the median to 820K seems to be largely the result of compositional changes. We know this because the HPI actually went up. The HPI of 2819 is now almost back to what it was in March (2823). While HPI is still 1.4% down YoY, it was more like 3.3% down in the previous months.

I happen to believe that Auckland prices will see modest falls in the coming months, but it's important not to let that belief bias the interpretation of the data.

An expert explained yesterday that house sales numbers are mostly based on the weather, so I guess last week was just less rainy than the same week last year.

Another interesting observation, while more are selling above CV, the amount over/under CV isn't even.

Just grabbed the first two pages of interests auction results pages and threw them in excel with sale and RV number for properties that had both.
24 of 42 sold over RV (57%) 8 properties didn't have RV and Sales price so were excluded.
The average of the ratio of Saleprice to RV is 98.28%
The sum of sales price $49.18m
The sum of RVs $49.79m
Ratio of the sums 98.77%

Cheapest compared to RV was a mortgagee sale 38 Lanigan Street , Birkdale at 71.6% of RV
Most expensive was 2/33 Norman Road, Hauraki at 22.7% over RV.

Add to that mix is that properties that go to auction are generally the better than average ones, yet the RV is based on the average in that area..

Just as an example, 32 Dolbear Street, Titirangi, That RV, would be for less than average 4b, 2b house in titirangi, yet the sale price of 850 on way of statistics shows it went for 70k over RV, in reality that's a fair price (in the current environment)..

Thanks for that data pragmatist

Just drove past Mt. Roskill south, over 3000 houses being built.. i believe half are kiwibuild

From reading, it appears many are going to be State houses!
Many are supposedly affordable with some being KiwFail!
Others are just for the open market!
Wouldn’t touch them with a barge pole if there are State houses amongst the others!
Trouble with a capital T

But you wouldn't know what you are talking about, this is Auckland, not the shaky city.

Yep, noticed a skip bin outside another one on friday on the way to work, and fencing up around one thats been vacated recently. about a third kiwibuild was the original target, but who knows where the numbers are actually going to end up. They shouldn't be selling any until they've cleared tehe backlog of people waiting for state housing in the area, and so far none of the stuff thats been built/started is slated for Kiwibuild from what i've seen on the website.

Had a chat with some of the locals,l.. the ones without the HNZ banners were KB...

I was amazed by the sheer size of development work..

Yeah, i doubt it. the website says things, but contradicts itself eg: the only mention of non-state houses that isn't To be confirmed is the blob at
Corner Sanft Ave, Burnett Ave and Freeland Ave
24 new state homes and 12 market homes
Sixteen 2-bedroom duplex style homes, six 3-bedroom duplex style homes, two 4-bedroom standalone homes. Building works have started in Spring 2018 with new homes completed Mid-Late 2019

Hmmm, 16+6+2 = 24... what about the 12 market homes? (And market homes aren't all going to be kiwibuild, some will be non-kiwibuild)

https://mtroskillsouthdevelopment.co.nz/assets/Uploads/26-30-Freeland3.pdf
nope, only 24 on the drawings too.

Its big alright.. https://mtroskillsouthdevelopment.co.nz/assets/progress-image/March-2019...

Why on earth would you want to own a home amongst state houses?
There is going to be limited upside as low priced housing, kiwiflops and state housing wouldn’t suggest a great capital growth area.

Not everyone is trying to farm capital gains.
Some just want an affordable and decently constructed place to live.

They will still have more capital gain than poor old Christchurch.

Isnt it funny how chch gets dissed for low capital gain yet many here on interest talk up their hopeful prospect that Auckland property prices will crash

It's banter.

Its ironical

haha got em

I agree, who would want to live amongst heaps of state houses, I have talked to people in that situation in Hamilton, they were told a lie when they bought their section and built their home and have regretted their choice ever since they saw what was happening. Wherever you see a group of state houses you quickly realise they are often badly maintained and managed and that includes the ones that are not long built.

From the first link.. 300 are state houses.. the rest are .....

The Mt Roskill South Development will take around six years to
complete and will replace around 260 state homes with around
300 new state homes and 600 market and more affordable homes
including KiwiBuild

I would also question how upto date this pdf is, as the latest plan covers 10,000 houses for Roskill south..

From what I saw yesterday, it would be close to 3000 house development...

No, That 10,000 number is the whole mt roskill development (Roskill South, Owairaka and Waikowhai)
https://www.beehive.govt.nz/sites/default/files/2018-09/Mt%20Roskill%20D...

And I seriously question the 10,000 number.. turning 2000 existing state houses into 10,000 is a 5 to 1 multiplication, and you need to allow for roads, reserves and other infrastructure. 2000 x 1/4 acre = 500 acres (2 million sq m)
2m / 10,000 = 200m2 each. Going to need a fair bit of going upwards to hit that.

Yup, going up is part of the mix...

Put bluntly I would consider millions made in chCh safer than millions made in the Auckland market at the moment.
We buy undervalue so we don’t need to wait for the market to increase and our rental returns are far superior

But if you’ve made millions why does it matter what market they came from?

You what?
Christchurch market is as sound as any market in Nz and there certainly is no downside with prices.
Certainly represents very good value and is only going to get more expensive as it gets rebuilt.
The fact is that so much land has been opened up and plenty of houses built and yet prices have held up.

There is a huge downside in CHCH; too many young dudes with shaved heads and weird hand salute!

Chairman, rubbish never see any at all.
You are dreaming jones.
Skinheads never worried us in ChCh there are far bigger threats to Nz than skinheads in ChCh.
Bigger worry is people holding rallies for land that has been paid for.

He's pointing out the difference between paper gains and banked gains. If you've banked millions, doesn't really matter anymore whether it was from Christchurch or Auckland. It's only the paper gains that would be affected by the characteristics of one or the other.

Question Rick. Is a paper gain that is then realised and then reinvested back, still a paper gain? Using same funds, same debt, same equity and same asset type whether stocks, bonds or property.

By realising a "paper gain" and then reinvesting back you've either sold something or borrowed against something. It's zero sum, especially in the same market where a rising tide lifts all boats. Sure, in The Man 2's case he always "buys under market value" and having such a keen eye for improvement potential he's probably pulling in some mean Reno ROI's. $100 of mistinted paint probably adds on average $50k to the value of his Redzone purchases. So once sold, he just buys another dump and banks the difference.

Nz Dan. You have no idea about property investment so you would be
Far better not commenting.
This site is for providing investment advice and if you can not give anything sensible, you would be far better not commenting or talking BS

Was my $100 of mistint paint to $50k return incorrect? A bit harsh to suggest I refrain from commenting on a slight technicality.