Auction volumes increased but the sales rate slipped slightly in Barfoot & Thompson's auction rooms last week

Auction volumes increased but the sales rate slipped slightly in Barfoot & Thompson's auction rooms last week

Barfoot & Thompson's auction rooms maintained their recent jump in activity with 159 residential properties marketed for sale by auction in the week of November 4 to 10.

That was up from 147 the previous week and just over 100 the week before that.

Sales were achieved on 72 of those properties compared to 70 the previous week, but that pushed the sales rate down slightly to 45% from 48%.

At the bigger auctions where at least 10 properties were offered the sales rates ranged from 36% at the Shortland Street auction on November 7, where a mix of properties from central and western suburbs such as Onehunga, One Tree Hill, Mt Roskill Glen Eden and Massey were offered, to 75% at the same auction rooms on November 5 where most of the properties were also from central and western suburbs such as Te Atatu, Glen Eden, Blockhouse Bay, Avondale, and Mt Albert.

At the big Manukau auction the sales rate was 37%, and on the North Shore it was 44% (see chart below for the full results).

Details of the individual properties offered are available on our Residential Auction Results page.

The comment stream on this story is now closed.

Barfoot & Thompson Residential Auction Results
4-10 November 2019
Date Venue Sold Sold Prior Sold Post Not Sold Postponed Withdrawn Total % Sold
4-10 Nov On-site 4 3   7   1 15 47%
5 Nov Manukau 10     13 3 1 27 37%
5 Nov Shortland St 9     2 1   12 75%
6 Nov Shortland St 16 2   12 2   32 56%
6 Nov Pukekohe 2     5     7 29%
7 Nov North Shore 12 3   17   2 34 44%
7 Nov Kerikeri       5     5 0
7 Nov Shortland St 4     7     11 36%
8 Nov Shortland St 7     9     16 44%
Total All venues 64 8   77 6 4 159 45%

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10
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Hardly suggestive that boom times are back.

36
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- the market is booming, a soggy cardboard box will soon be worth $5m

- no it's crashing, waterfront mansion for $2.50 next week

- you don't know anything, you don't buy and sell houses

- you're a real estate agent

- you're not really a real estate agent

There, I saved many of you some time and effort.

10
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*standing ovation*

Can we pin this comment to the top of every property post comments section please @mod

- mixed signals, market is moving sideways

Also:
"Many people are saying a bull run is coming. Not me though. I'm just saying that many people are. Also not saying it's not coming. But it can't be ruled out!"

.

And its just around the corner, but its not imminent!

More houses in Market and less number of sales is not a positive signal but few like 89 Reevs Road and few others which sold , went for very good price.

So is mixed trend though many houses are not going in auction but some, which are being sold in auction are fetching excelent price.

If few houses fetches excellent price, it is highly unlikely that the house price will fall from here - may be stabilize and fining a deal may get difficult for FHB.

11
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... what?

Well we all know that sales rates will increase when Sellers become more realistic about prices that are more inline with wages. Also interesting to see that it's properties in the more affordable areas that are selling at auction not the exclusive expensive areas.

We looked at 6D Brookfield Street Saint Heliers as a possible downsizing option. The RV is $2,275,000. It listed on 30/10 and the auction has been brought forward to this Thursday. It's not just properties in the more affordable areas selling. This is not a renovated property so I look forward to seeing if CMAT's theory holds up re Price to RV. CoreLogic updated to 95.2% of RV on my home as of 10/11.

An aging population ( which we are) is increasingly going to realise that they want to relocate/downsize/buy in an area close to what's needed with a minimal amount of time or physical effort expended. ie: close to supermarkets, hospitals, dentists etc. Those who get caught, say, with a Lifestyle property in the middle of nowhere, albeit a multi-million dollar investment, may struggle to find an interested buyer. It's great to live in one of those places; across the road from the white sands or down the road from the skifield, 20 minutes out of town etc. when your 40, or even 50, but at ~60, it's surprising what life throws at you when it's least expected.
My point? More and more people, who want to downsize, are going to find it increasingly difficult if they need to release their capital before they can move. Then, it's a matter of.....selling price...

The 65+ age segment will find their physical strength waning (needed for the upkeep of a lifestyle block).
The 30-40 minute drives to the nearest supermarket will become more tiresome, and the lack of decent medical facilities within 90-120 minutes' drive will become an increasing concern (especially in the wake of their first "episode").

My Brother has that issue, I've always been a City person. This would be a move of less than one km. The attraction is less upkeep and a better view. The biggest thing I'm noting is that the cost per M2 of a standalone house is less than any downsizing option so it's often a struggle to see much money coming out of downsizing.

It will be interesting to see what it goes for.

It's listed on TradeMe between $1.9m - $2.0m.
Homes.co.nz has it at $2.39m(?! - Starting to have serious reservations about their algorithm).

It is a unit though, I find them harder to assess value on - completely different market.
Certainly has a beautiful view. In that price bracket it would be competing with both:
- New builds (The Horizon etc). Obviously it is in a better location but far inferior fit-out.
- Similar Retirement Village units. Top units at Meadowbank Village are selling >$2.0m (albiet an ORA) with views over Orakei Basin, again Brookfield is in a better location but dated.

I can't see any sales of this unit on record. 6C sold for $1,935,000 in 2015, which may give an indication. I suppose we will have to wait and see.

You might find this interesting Ex Expat.... ;)

i) https://ibb.co/3MRsnQg
ii) https://www.bayleys.co.nz/1800489

Another one: I went to open home for 93 Victoria Ave Remuera. Was surprised to see it'd sold pre-auction. RV 3.4m. My guess it that it sold at around or above that level, otherwise why sell before auction?

Probably overpriced.

There are still very few new spring listings, at least in Auckland. Now fewer total properties than at this time in 2017, and something like 20% fewer than this time last year. And in the areas I watch, a reasonable part of what has been listed in the past few weeks are relistings of properties which were put on last year and pulled off. It will be interesting to see if those vendors have got more realistic in the meantime, or if the market has tightened at all. It still feels pretty quiet, not a lot of listings, but buyers don't seem to be tripping over themselves to get at what's out there.

Yes I am finding the same. Major dearth of new listings in the areas I am looking at, and a lot is just repeats.

The standoff between buyers and sellers continues it seems. Will be interesting to see what breaks the deadlock eventually.

Depends on the area I guess, but even looking at the more expensive suburbs in Auckland, the number of listings does seem to be up in those areas in the last year or so. Even taking a quick look through TradeMe's property listings there does appear to be quite a build up:-
Remuera: 166
Saint Heliers: 80
Parnell: 60
Epsom: 72

Method of sale, for auction, is increasing in Auckland.
Real Estate agents like auctions, because get commission faster.
Sales numbers have been less bad in last 3m than previous 6m, compared to same periods in 2018.
However, sales are still down on 2018 and on 2017 and October was no better.
October sales were boosted in 2018 by buyers and sellers trying to front-run the OBB.
Hence October 2019 sales are worse (compared to 2018) than July-Sept sales were.

First 9m sales in Auckland in 2017, residnetial only, were 14,993.
In 2018 it was 16,353
In 2019 it was 14,461

Section sales in Auckland in 2017, first 9m were: 1784 (2015 = 3550)
In 2018 it was 2323
In 2019 it was 1374.

Land prices were massively inflated in 2014-15 due to section sales to foreigners. Section sales rose in that year by 67%, whilst residential sales only rose 25%.

That driver of land price (and consequently, house prices built on them) is NOT going to be repeated anytime soon. So, we can forget all this nonsense of another surge in Auckland property prices.

Until Asian immigration age demographic surges in age group 40 - 47, there will be no surge in buyer pressure or demand. And that won't come until 2025a at earliest. On top of that, population of Auckland is ageing and number over 65 is rising 7 times faster than number under 15. As most housing ownership is concentrated with those over 65, in % terms, this means more concentration of wealth and more of a demand gap. This problem is increasing each year due to boomers retiring.

10
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We are avoiding auctions, if we see anything we like that is being marketed by Auction, we wait and see if it fails to sell, then we'll consider making an offer. Stuff wasting all the time/money to do your due diligence in advance to be able to bid at auction when you have no idea how realistic the vendors expectations are. Hence why the last auction we attended to watch is still on the market with an asking price $50k over where they managed to get bids on the day.

With you 100% on this strategy. I guess it's only viable if you're not in a hurry, though.

When you overhear couples talking to agents at openhomes saying they have spent >$3k on doing the due diligence on several Auctions and either been outbid, or the vendor wanted silly money, and they have nothing to show for it... good way of depleting your deposit..

Yeah, that's a pain. I don't think avoiding auctions completely is the right strategy, but you need to be very confident that you have a good chance of success before spending the money on DD.

How could you gain that confidence? It seems that the only source of information is the agent, which is notoriously unreliable.

If you look at enough houses in your area of interest, you'll figure out the tendencies of a good number of agents and learn to read them.

Also, you can ask the agent how many people have had a builders inspection. This is simple objective piece of information that the agent will typically be happy to give you and it's a decent indication of level of serious interest. Lots of serious interest means less chance of paying a price you're happy with.

Ask why they're selling. If it's a deceased estate or divorce/separation chances are they just want to move on and will be reasonable about sale price. Similarly if they bought recently, they're more likely to be hold-outs than if they bought years ago and are making a good capital gain.

Timing also matters. An auction in April is "last chance" before the winter lull, so less chance of a hold-out. Auction in Feb might be prepared to hold out for a couple of months.

Above all, know the property's value according to recent similar sales, not just the data but actually having visited those houses so you have a clear idea of the comparison. It takes tremendous time and commitment to build this knowledge, but there's no substitute for it.

I agree that all of that can be useful, but none of it really speaks to the vendor's expectations.

I've watched auctions in my area for the past 12 months and asked that same question of agents.

It can be hit and miss - appears that, in the limited cases where there are bidding wars, there are still mugs prepared to bid strongly at auction without doing DD (if I'm to believe agents who tell me no-one has done a builders report as at the last open home, usually 2-3 days before auction).

That BI question is actually a very good point, thanks for that.

Very well said HH

I'm 100% the same.
In no hurry so not the least bit concerned about letting properties go to a bigger fool right now.

If an offer is acceptable then that's the starting point, then I'll spend money on DD and anything crops up then we'll have a discussion about it.

In current market situation no one should be in rush to buy specially FHB.

Or up-traders in a cash position buying into a thin market ;)

At the moment the liquidity the auction method provides is essential - conditional offers drag out the lead time on settlements. Essentially, this s**t flows upstream as people 'climb the ladder'.
Real Estate agents know that without the liquidity at the bottom, the higher end collapses completely. Hence why the distribution of sales by auction are disproportionately weighted to the lower end of the market.

Definitely liquidity is lower.

You can still have short conditional periods (5-10 days) following receipt of an acceptable (cash) offer though.

Yes. But a 5 day conditional offer on finance is a very different thing to conditional subject to sale of property.
That's my point. Auction removes the incidence of the latter - the liquidity that allows all other property transactions to proceed.

Agree auction is primarily beneficial for agents. Ill bet there are many owners in the auction side room being sweated (I need a commission) to meet the market, but with rates this low it is unlikely they have to have their hand forced. Next election will be very interesting as the Nats will want to throw the flood gates of foreign buying wide open again to boost their portfolios and Aussie bank profit. Nothing there to help most kiwis, which is actually the Governments job.

He, he umm, There is a bit of a flaw in that plan regarding National opening the flood gates to foreign buyers. Has no one told them that China is still well and truly clamping down on their capitol outflows. Canada is a good indicator of this effect: Heated Vancouver housing market moderating for first time in three years: CMHC https://vancouversun.com/news/local-news/heated-vancouver-housing-market...
And Australia's property market is really only being propped up by falling mortgage rates.

Mikekirk29,

Can you explain why real estate agents are bringing forward the auction dates for properties to be sold by auction.

One reason I heard was that in a market where there is an absence of potential buyers, when the real estate agent gets an offer that is acceptable to the vendor (and doesn't believe that there are many more interested buyers), the real estate agent brings the auction forward so as to lock in the sale (and their commission). This is to reduce the waiting time for the potential buyer and hence reduce the risk of the potential buyer walking away to look for another property elsewhere (and the real estate agent missing out on a sales commission).

Short answer is I do not know. But your explanation sounds plausible.
Also, listings have already peaked (pre xmas wise) in in some areas and buyers are in short supply.

Here is my theory of where we are.
There was Lehman brothers shock.
3m after that was January 2009. From there to Septmber 2010 the pcm average total sales were: 2488and residential only sales pcm were 1742.

Fast forward to when China stamped on overseas transfers of capital (announced October 2016). 3m after that is January 2017. From there to September 2019 is 33m.

In that 33m the total sales in Auckland have averaged 2496 pcm, virtually identical to post Lehman 21 months period. Residential sales in that 33m have averaged 1742, again extremely close to post Lehman 21m period.

In addition we have had the Labour government introducing the overseas buyer ban that has caused a 41% drop in Auckland section sales in first 9m of 2019 and 11% drop in residential sales.

There is nothing around to counter these impacts, and nothing in prospect.
What there is is a growing surplus of supply.
That means price falls. March, as you know, is when I see this starting in earnest.
As, by the way, inflation is 2% and house prices are about -2% in last 12m in Auckland, real prices are about 4% below where they were a year ago.

Mikekirk
Are you a reinvented Joe Wilkes?
Similarly lots of analysis - in his case that led him to state on numerous occasions a crash in 2019. Time is running out for him; but then he has disappeared.
We look to March 2020 (although your previous comments suggest that this is now just a case of pushing that prediction out)

Oh, . . . and onset of winter seasonal effect doesn’t count

Well Mike appeared a few weeks after Joe Wilkes disappeared...

Utter failure to engage with or counter the argument and reasoning I presented.
If you disagree with the argument and reasoning, it is customary in intelligent conversation, to state why and what basis for disagreement is.
Personal remarks are irrelevant to the argument which you did not answer nor address

Wasting your time mate if you are expecting those guys to engage in rational, intelligent discussion.
Housing is a religion for them, and like any religion it's a rationality free zone

Hi Fritz

I see your point. Vested interests in some cases militate against open mindedness and debate. People have difficulty believing I am an Agent because I am interested in why things are as they are and also in power structures and how things might be arranged more fairly in society

"Housing is a religion for them"

For many people, their core belief is that property prices do not go down by much. Here is an example of the potential consequences of that belief by a large number of people, when combined with access to easy credit from lenders and property prices at extreme levels.

Cause of the housing and credit bubble in US

From the May 2010 FCIC interview with Warren Buffett, a reknowned investor and Chairman and CEO of Berkshire Hathaway

MR. BONDI: As I mentioned at the outset, we’re investigating the causes of the financial crisis. And I would like to get your opinion as to whether credit ratings and their apparent failure to predict accurately credit quality of structured finance products, like residential mortgage-backed securities and collateralized debt obligations, did that failure, or apparent failure, cause or contribute to the financial crisis?

MR. BUFFETT: It didn’t cause it, but there were a vast number of things that contributed to it. The basic cause, you know, embedded in psychology –- partly in psychology and partly in reality in a growing and finally pervasive belief that house prices couldn’t go down and everyone succumbed –- virtually everybody succumbed to that. But that’s –- the only way you get a bubble is when basically a very high percentage of the population buys into some originally sound premise and –- it’s quite interesting how that develops –- originally sound premise that becomes distorted as time passes and people forget the original sound premise and start focusing solely on the price action.

So every -– the media, investors, the mortgage bankers, the American public, me, my neighbor, rating agencies, Congress –- you name it -– people overwhelmingly came to believe that house prices could not fall significantly. And since it was biggest asset class in the country and it was the easiest class to borrow against, it created probably the biggest bubble in our history.

Further to other stats above:

In peak mania (Jan 14 to Sept 15) the pcm sales for total sales were 31% higher pcm than in Jan 17 - Sept 19.
Residential sales were 42.6% higher.

That is, totally aberrant.
The 2012 - 19 drop in residential sales for first 9m of the year was 20,428 v 14,461 (- 29%)
The 2012-19 drop in section sales was 33%
The 7 year trend is quite clear: prices rose and sales fell.
What happened in 2014-15 was that those who could invest here from abroad did so, disguising the increasing inability of natives to purchase.

Since all that foreign cash has been stopped, we revert to the mean, ie the under-lying trend, which is falling home ownership and greater wealth extraction by to 20% of society in form of rental income.

Mikekirk
You are overlooking every NZ man and his dog who were speculating during this period and boasted about it on this site. Get over FB - they were a small number albeit a little higher in some Auckland suburbs.
FB were not present throughout many NZ markets; here in HB prices took off (and still are) despite little evidence of FB. Low NZ interest rates and local NZ speculators along with high immigration and housing shortages were far more numerous and/or greater driver than FB.
. . . and if FB were such an important driver then the FBB is not showing any effect on prices.

"a little higher in some Auckland suburbs"

come walk with me to my kid's school tomorrow and see if you want to stand by this...

realterms
You still have not got your head around the notion that many recent immigrants are legitimately "us" and not FB.
Do a check. If it is an integrated or state NZ school and they are not paying fees then they are "us" i.e. NZ residents or citizens; otherwise they will be paying fees. Ask the principal how many fee paying students there are.
There is a vast difference between FB and legitimate recent immigrants; you really need to get your head around this.
Yes, I have noted that historically high levels of immigration over a sustained period is one factor that has contributed to house price rises - but that is not FB.
I am interested in you following this up and having the integrity in posting the name of the school and outcome. So yes, I will stand up to it . . do you have the integrity to do likewise.

Talk to some primary school teachers. Central Awk has big issues of non English speaking kids dumped in them by parents that expect the primary school to not only educate them but, but teach them the language from scratch that they are attempting to educate them in.

Averageman
I appreciate the issue with ESOL.
However, that does not mean that they are not a New Zealand citizen / resident fully entitled to be here as much as you (I assume) or I.
In the late seventies I taught in a school (by choice) in which just over 80% of students were either born in the Pacific Islands or were first generation Pacific Island New Zealand where their Pacific language was the first language in the home.
The interesting thing was this was in the heart of Mangere East and most of the homes from which these students came from were part of private development (Keith Hay homes). The parents coming from the Pacific Islands would not have brought great wealth, were largely poorly educated by New Zealand standards, but usually both the mother and father worked in low paid blue-collar jobs (often with one working in a secondary job) to support their family and buy their home.
In my experience as a teacher, as NCEA will attest, Asian students have significantly greater success than any other ethnic group. I also see Cambodian refugees who escaped Pol Pot's regime - as well as other ethnic groups - now leading very successful lives.
All very, very successful New Zealanders contributing to New Zealand.
Seriously, you need to ask yourself if there isn't an implicit prejudice in your assertion.

And this has what to do with foreign buyers, who buy houses without living in New Zealand and therefore without sending their kids to New Zealand schools?

They are all resident, at least in the sense that they live here enough to send their kids to school here, so in that sense you are right. But to define it so narrowly would be to miss out on the torrent of foreign-source capital which was so prevalent in the market, and now seems to have retreated significantly.

Prices were going down steadily in Auckland until the RBNZ got into action and cut the OCR.

In some Auckland suburbs... it was never, ever 3%.
The price ripples eventually drove both potential FHBs and investors seeking yield out of Auckland and into places like HB. The increase in homelessness in places like Tauranga, Hastings and Whangerei is the ripple effect of speculation in the Auckland market.

'Low NZ interest rates and local NZ speculators along with high immigration and housing shortages were far more numerous and/or greater driver than FB.'
Interest rates are much lower now than in the boom 14-16 period, yet the market is stagnant and weak. So how does your theory sit with that reality?
I think you re right, lower interest rates fueled the boom to a significant extent, even more than FBs. But then the boom ended because prices reached totally unaffordable levels. Interest rates can only go so far in mitigating sky high prices.

Anecdotal. Not connected to REAL funds pouring out of China in 2014-15 and subsequently truncated, which you did not address.
prices rose in areas outside of areas which Chinese were most interested in because price rises allowed people mostly in Auckland to cash out equity and move somewhere they could bank the difference in price. As this has happened in Far North and Whangarei, sales have of course cratered as locals cannot afford it. Not showing effect on prices YET, or at least no major effect in Auckland YET. Surplus supply is the key and this will drag prices down in last stage of market cycle - capitulation, after March 2020. World recession next year will assist this.

Good point -"disguising the increasing inability of natives to purchase". It also caused much backslapping and "how great am I like comments" in the property owning set around bbqs and on forums like this, while alienating most kiwis under 35. This in turn caused many highly skilled under 35s (doctors, IT, tradies etc) to vote with their feet and move to Aussie which is a great return on 13+ years of free education and healthcare for kiwi tax payers.

Looking forward to next years election, National looks to be hiding a cell of the CCP, NZF just misrepresented, Lab is still a big question mark, and the Greens are the far left in disguise. Lucky us.

yeah, what options....
I'm just going to vote in self interest terms.
If the Gnats give a decent tax cut, I'll vote for them.
If the left can't be relied on to deliver for the greater social good, then you might as well look out for number one.

Hmmm "the greater good" vs "number one"

Wonder what average CV rose by in 2017 compared to previous rating level.
And what impact did land value rise in that period have.

Mike Kirk, in your career as a Real Estate salesperson, how many auctions have you listed??

None.

Mike, why have you never listed an auction in Auckland?
How many have you listed to be sold by other methods?

This is really none of your business.
Why can you not simply engage in discussion of the issues raised and analysis. I do not question you in this fashion. I study and analyse Auckland housing market. That is part of my job. But first and foremost I am an eternal learner and want to know history and dynamics of my subject. I have long experience of life outside real estate. But that too is not appropriate matter for this forum. But it informs my values and investigations

Hi Mikekirk, What does your study and analysis tells about Auckland housing market.

Hi Richard,

basically: over-priced; over-supplied.
Buyer mentality has switched to deflationary expectation.
Downward trend of sales 2012-19 was interrupted due only to surge of money from abroad, now truncated.
Due to this and ageing pop, demand will continue to be in deficit and recession in 2020 will add to that downward pressure.
Over-supply will press down prices form March 2020 on.
Prices will NOT rise in Auckland in 2020, as so many "useful idiots" aver, without explanation of reasoning.

Mike, I am sure you are a hard worker and have good values, not questioning that what soever!
You clearly do a lot of research and compile some interesting statistics and you may well be totally correct in what you say?
You quoted yourself as being a real estate salesperson and I will acknowledge that you passed your exams and were employed at Telos Group in Silverdale for a time.
However, you may well have a current real estate license to enable you to sell real estate but you currently are not, it is clearly obvious, and that is your perogative.
I successfully sold real estate in ChCh for many years and I never once encountered a single salesperson that spoke so negatively about a product that they are meant to be selling!!
I wish you all the best and I Will try not to question you again regarding being a current practicing real estate.

A considered reply thank you. Yes I am negative on state of the market but seeking best price for vendors is critical to the job which I always pursue.

Mike, the real estate market is very steady in most parts of NZ.
Agree that the Auckland market is somewhat overpriced for what you get living in Auckland.
For what you can buy an average house in Auckland I can achieve an income of approx. $60k per annum currently and far more from previous years buying.
It just depends on what you want out of life, financial security for your family living in Christchurch or being a slave to debt by living in Auckland by owning your own home!

Yes, agree about rest of NZ, which is far more affordable and less influenced by speculative flow.
And, as you rightly point out, Christchurch people can more afford something decent and stop renting.
What concerns me about Auckland is that so few people can afford to buy who are under 35 years old, unless they are earning in the top earning brackets.
The bottom half of the pop has little access to leverage to buy rentable property, hence they lack access to something that would mean they might have to work less hard in the second half of life.

Still a practicing REA.
Getting listings proving tough this year but am still at it.

Much of what sells at auction rooms appears to be apartments.
Apartment sales under $600k in Auckland:

Jan-Sept (end of) 2019: 926
2018: 1448
2017: 1259

That is 36% fewer sold in 2019 than in 2018 and 26% fewer sold in 2019 than in 2017.

Forgive me, but are we not being told that lots more apartments are being brought to market each year?
In which case someone has a lot of unsold stock.