Residential property auction numbers down 50% compared to a year ago

Property

Sales were achieved on just over half the properties offered at the latest auctions but auction rooms are quieter compared to this time last year

19th Oct 19, 8:19am by Greg Ninness

Property auction numbers have been reasonably steady over the last few weeks although they remain well below where they were at this time last year.

Interest.co.nz monitored 165 auctions around the country in the week from October 7-13. Sales were achieved on 88 of them, giving an overall sales rate of 53%.

Of those 75 were sold under the hammer, seven were sold prior to their auctions, and six were sold immediately after their auctions.

Where selling prices could be matched with rating valuations (RVs), exactly two thirds sold for more than their RVs, with one property selling for the same as its RV and the rest selling for less.

There is now little difference between the auction results in Auckland and those in the rest of the country, with the Auckland auctions achieving an overall sales rate of 54%, and where prices could be matched with RVs, 63% sold for more than their RV.

However the number of properties being brought to auction, both in Auckland and nationally, is still well below where it was at this time last year.

In the equivalent week of last year (8-14 October) interest.co.nz monitored 326 property auctions of which sales were achieved on 137, giving a sales rate of 42%.

That suggests auction activity is running at about half the pace it was at this time last year.

With the REINZ reporting that September's sales were the highest they have been for that month in the last three years, the low level of auction activity suggests agents and vendors are being much more cautious when choosing a sales method for a particular property.

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42 Comments

by Dgm | 19th Oct 19, 8:26am 1571426792

EU central bank members have joined to voice their concerns over negative interest rates.. so they now realize that it's doing more harm than good..

It's time CBs realise that low interest rates are just kicking the can further out of reach

by bw | 19th Oct 19, 8:41am 1571427671

All assets are liable to a big, fast correction IF things turn ugly, no matter whether they are auctioned or not....So I doubt that interest rates are going anywhere but further down. ( And, yes, that's madness)

“The search for yield in a prolonged low interest rate environment has led to stretched valuations in risky asset markets around the globe, raising the possibility of sharp, sudden adjustments in financial conditions....a global downturn half as severe as the one spurred by the last financial crisis would result in $19 trillion of corporate debt being considered “at risk””

https://www.reuters.com/article/us-imf-worldbank-gfsr/imf-heightens-war…

by CN | 21st Oct 19, 10:24pm 1571649891

The IMF warned that if bond funds were unable to meet redemption requests, this could spark fire sales where managers dump assets to raise cash, which would inflict losses on other investors and “increase the risk for the financial system in the extreme case”.

https://www.ft.com/content/e5edad9a-4bf4-4941-beb3-115ef9f13437

by HeavyG | 19th Oct 19, 6:47pm 1571464028

They are puppets for their private bank masters who want the CBs to let them run free. I don't shed any tears for the banks who are making money hand over fist.

See https://www.cnbc.com/video/2019/10/18/negative-rate-environment-is-harm…

by fat pat | 21st Oct 19, 7:41am 1571596914

Carded rate in Germany for a 10 year fixed mortgage is now 0.48%

by NorthernLights | 21st Oct 19, 4:08pm 1571627331

Gee aren’t all those extra immigrants buying up the houses ?
It must be simply crazy trying to live in Auckland these days
Good Luck - Stiff Upper Lip

by printer8 | 19th Oct 19, 9:25am 1571430318

"With the REINZ reporting that September's sales were the highest they have been for that month in the last three years, the low level of auction activity suggests agents and vendors are being much more cautious when choosing a sales method for a particular property."
Great! Something I have been posting for some time about and that care should be taken in making sweeping assumptions based on the raw auction results as some posters tend to do.
However, your auction data is particularly valuable as close as "the most current time indicator" of what is happening in one part of the - but not the total - market.
So thanks for the information and keep it coming!

by Due Diligence | 19th Oct 19, 8:59am 1571428766

Agree 100%. Auction numbers don’t reflect overall market volumes. And while the number of properties taken to auction and % of successful sales via auction is interesting, I’m personally more interested in the prices being achieved on those that do sell at auction.

by tothepoint - d… | 19th Oct 19, 12:44pm 1571442273

I've been emphasising for well over two years that the Auckland housing market had moved on since the heady days of the 2013-16 boom and that auctions were becoming far less relevant - and indeed they have.

Auctions are a much less preferred mode of selling Auckland property these days........ Nonetheless, auction clearance rates have risen over the last few weeks which may signal a more buoyant market (with rising house prices) over the forthcoming summer and further into 2020.

But those who claim they can hear the distant stampede of the bulls are being, in my opinion, a little too optimistic.

Enjoy the weekend everyone - even those of you with bank term deposits.

TTP

by Nzdan | 19th Oct 19, 1:18pm 1571444299

I was looking at term deposit rates yesterday and thinking wow 2.6% p.a. After tax and inflation, 0.25%.

I'll just keep putting my money towards the mortgage.

by Due Diligence | 19th Oct 19, 1:44pm 1571445854

Paying off the mortgage will save you 3.5% annually in interest, but putting the savings into a growth mutual fund will earn you about 7% return annually. The latter option would leave you 3.5% better off than the former. And inflation would be eating away at the mortgage over that time too.

by swapacrate | 21st Oct 19, 9:20pm 1571646019

Hi Due Dilligence, Im very naive with these types of things, like very naive, where would you find such a thing and how do you go about it. 7% sounds pretty good.

All my money at the moment is going into my start-up and my house, but if I was lucky enough to strike gold with my start-up, it would be good to find something I can invest into and get 7%, one day.

by printer8 | 19th Oct 19, 4:42pm 1571456553

NZ Dan
Right call.
I found that my bank was pretty accommodating if I did need money for some purpose.
Banks tend to see those that manage their money well, including paying down their mortgage, as reliable, a sound bet, and as such, a customer that they wish to keep and their tend to be accommodating.
I am not sure of the current situation but even if you put a little of a revolving mortgage; then one can not only pay down but also put one's pay into against the revolving mortgage, and in the longer term as this is paid off, move some more prime mortgage across as bank loan details allow.
This needs a bit of planning to ensure that it is cost effective, but with the such low term deposit rates (less tax as you point out) it would seem the way to go as a no-brainer.

by NorthernLights | 21st Oct 19, 4:06pm 1571627166

Store gold .... you’ll need it

by Houseworks | 19th Oct 19, 1:37pm 1571445445

I am goin to give bonus bonds a whirl, it's like a lucky dip you never know what might come up.... a bit like auctions really. Have a good 'rugby' evening ttp?

by tothepoint - d… | 19th Oct 19, 6:23pm 1571462602

Thanks Houseworks!

You enjoy the rugby too!

TTP

by Due Diligence | 19th Oct 19, 1:43pm 1571445820

Yes, personally I wouldn’t sell via auction in the current market.

by tothepoint - d… | 19th Oct 19, 7:44pm 1571467456

Hi DD,

I wouldn't sell anyway.......

The market has plenty of upside. NZ is one of the best countries in the world to own property - especially Auckland and Wellington.

TTP

by Due Diligence | 19th Oct 19, 10:27pm 1571477264

Yes, wouldn’t dream of putting any property on the market. But if I was so inclined, I wouldn’t go via auction. Long term upside is excellent. As they say, the best investment on earth is earth. Been keen to get into the Wellington market for a while - earthquakes and insurance issues are my only reservation.

by Houseworks | 20th Oct 19, 10:29am 1571520571

Not selling properties is a very good investment principle and I would stick to it too but would need unlimited cash :) I've been in the position where a property comes up for sale that I would really love to own and short of taking on more debt you sell something else to free up equity. Never trade-in the wife but as for cars and houses I think I am personally okay with that.

by company of heroes | 21st Oct 19, 11:46am 1571611561

Hi, Tothepoint, could you please explain why NZ is one of the best countries to own property? Especially Auckland and Wellington despite Auckland's building quality issue and Wellington's frequent earthquakes feature? I've heard a friend from UK saying House quality in UK is way better than house quality here. So what make properties here so attractive to people?

by NorthernLights | 21st Oct 19, 6:09pm 1571634579

Yes you missed the best opportunity to sell in 2015
Sadly too many swallowed the jingle “Auckland property only goes up” Ha ha ha
I’d also agree that NZs construction values need correction however another building just collapsed here in the states so who are we to judge

by Yvil | 19th Oct 19, 10:35am 1571434504

Indeed Printer8,
- when there are many buyers, many sellers (rightfully) market their houses for sale via auctions, there's no better way to get a top price than by auction when 3 buyers fight over 1 house.
- when there are fewer sales and buyers, auction is not the way to go, it's tragic having only 1 buyer bidding for a house and the auctioneer trying to get an auction going.
It ensues naturally that now, when the number of sales are lower, less sellers (rightfully) market their house via auction and choose other ways (by negotiation, deadline treaty, fixed price etc…)

by cmat | 21st Oct 19, 3:29pm 1571624973

Is... is that an admission that the market has slowed?

Say it ain't so.

by Yvil | 21st Oct 19, 8:36pm 1571643380

Strange question, of course the market has slowed down a lot since 2016, maybe you're confusing number of sales, which has dropped considerably with price, which hasn't?

by Dgm | 19th Oct 19, 9:02am 1571428952

China's economic growth slowest in 30 years..

Oh yes, money grows on trees to keep the housing bobble growing/glowing

by Houseworks | 19th Oct 19, 9:42am 1571431353

TMI Lol

by Houseworks | 19th Oct 19, 9:42am 1571431343

Auctions are both exciting and stressful at the same time whichever side of the fence you're on. I have watched and participated in quite a few and I like them. From a buyers point they are transparent on the day but DD beforehand costs. As a seller it's a good organized process but you're relying on buyers to have their money arranged in advance. There are pluses and a few negatives for both sides. Some minor changes possible to the process I dont know.

by Carlos67 | 19th Oct 19, 9:58am 1571432307

Don't like auctions myself and with the low clearance rates of late just prepared to wait and have it not sell, have the vendors get realistic and then wait for them to list it for a price. Too much of a risk with the quality of builds these days, you need time to check everything out in advance and the typical 30 days from it listed to the auction date is to much of a rush. Its the RE's that are pushing the Auctions, they hype up your expectations and the promise of a quick sale, which means they not only make money from the auction they get their commission faster.

by THE MAN 2 | 19th Oct 19, 10:43am 1571435001

Personally love the auctions buying wise
You can pull out at anytime and other times buy extremely well.

by Houseworks | 19th Oct 19, 11:43am 1571438609

Are you going to many auctions nowadays TM2

by THE MAN 2 | 19th Oct 19, 7:04pm 1571465067

Probably only once Or twice a month on average.
Bid on one or two in-house, often without having viewed them, if no other bidders or much competition.
Will only buy if good buying as we do not have to buy nowadays .

by CourtJester | 19th Oct 19, 10:23am 1571433800

It has been foreseen...
Mind you, not by our resident oracle TTP.

by tothepoint - d… | 19th Oct 19, 5:58pm 1571461099

Hi CourtJester,

Can't you get anything right?

Go read my post above - and dozens more like it in other threads.

You're a DGM (Doom & Gloom MORON).

TTP

by CourtJester | 19th Oct 19, 10:10pm 1571476212

Why the aggression? Did I hit a nerve?

by CN | 21st Oct 19, 5:13pm 1571631226

Some people choose to resort to name calling and ad hominem attacks when the quality of their counter arguments & rebuttals are weak or non existent. It is also a reflection of the person making the comment.

by Glitzy | 19th Oct 19, 11:35am 1571438117

I wonder how many of those REINZ Sept sales were new build presales completing in September. I'm just not seeing the sales pick up in existing homes in Auckland.

by Houseworks | 19th Oct 19, 11:46am 1571438782

Nobody has the stats ... so we can continue the conjecture and debate without interruption.

by Cowpat | 19th Oct 19, 1:20pm 1571444424

"Auction remains the most popular sales method' market report . Barfoots September 2019.
Of the total Auckland sales ,auction accounted for 26.3 percent of all sales, or 479 properties .REINZ October 2019.
Over 900 Auckland properties were auctioned during the September month, approximately 45 percent of all the "new" listings average for August/September. Of the total 1715 sales during the month ,many had already failed to sell previously by auction, and had become part of the 5 months of stock, many relisted by sale by alternative means.
Auctions remain a significant indicator of the underlying strength /weakness of the housing market , and provide a timely indicator of housing sales volumes, given its relationship with the flow of listings .Sales volumes remain extremely weak , on a historical basis , but particularly so given the current financial settings .

by gordon | 19th Oct 19, 7:55pm 1571468113

There will not be much competition if any in poor old Christchurch. It is a small town, gradually losing more and more significance. People who want to get ahead move north and predominantly to Auckland just like our immigrants.

by Houseworks | 19th Oct 19, 8:09pm 1571468985

Gordon, sorry to disappoint:
from the news this week, "Meanwhile, Westpac has predicted that the cancellation of capital gains tax and tumbling mortgage rates would raise house prices up to 7 per cent in 2020.

The bank predicts that the turnaround of the market would be most pronounced in Christchurch and Auckland, where markets have been weakest."

Damn!

by gordon | 20th Oct 19, 12:37pm 1571528230

Interesting that Westpac confirms my belief that Christchurch has had a very weak housing market in terms of valuations. The Boy will say otherwise as he knows better. What will happen in the future is anyone’s guess.