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Auction numbers are still small making it hard to draw conclusions, but there was no sign of a price collapse at Barfoot & Thompson's latest auction

Property
Auction numbers are still small making it hard to draw conclusions, but there was no sign of a price collapse at Barfoot & Thompson's latest auction

Auction activity continues to pick up slowly, although the low number of homes being auctioned online makes it difficult to draw too many conclusions about the state of the market post-lockdown.

On April 12 Auckland's largest real estate agency Barfoot & Thompson held an online auction of five properties, two that would be likely to appeal more to owner-occupiers and three that could appeal to investors.

Results were very mixed, with two properties attracting multiple bids and selling under the hammer, two properties that had just a single bidder and were passed in, and one that didn't get any bids.

The first property on offer was a modern, brick and tile, four bedroom/two bathroom house with a double garage on a 722 square metre section at Somerville in Auckland's eastern suburbs. It had a Rating Valuation of $1.275 million.

Bidding opened at $1.16 million with several bidders initially joining the fray. The bidding stalled at $1.291 million at which point the auction was paused while the agents held discussions with the vendor and potential buyers. Thereafter bidding proceeded again, but very slowly and extracting higher bids was like pulling teeth.

All up the property received 20 bids. But the auction was paused four times for behind the scenes discussions and it took more than 35 minutes before it finally sold under the hammer for $1.382 million.

The second property on offer was a standard four bedroom weatherboard house with a separate single garage on a 680 square metre section at Manurewa in South Auckland.

The marketing material for the property suggested prospective buyers consider "creative ideas for renovation or subdivision."

It had a Rating Valuation of $590,000 and there were several bidders competing for it, but as with the first property the bidding was extremely slow and it took nearly half an hour for it to sell under the hammer for $610,000.

The third offering was a new four bedroom/three bathroom house on two levels with a single garage on a 310 square metre section at Takanini in South Auckland. It had a Rating Valuation of $800,000, but there was only one bidder for the property and it was passed in when he/she wouldn't budge at $720,500.

The fourth offering was two bedroom house with a separate single garage on a 733 square metre section that backed on to the railway tracks in Manurewa. It was marketed as an "urgent sale" with potential to build apartments or terrace housing or be converted to commercial use. It had a Rating Valuation of $540,000 and was passed in after receiving a single bid of $600,000.

The final offering was a two bedroom house on two levels with a carport in Auckland's inner west suburb of Waterview. It had a Rating Valuation of $710,000 but was passed in after failing to receive any bids.

So it was a very mixed result and the only conclusions that could be taken from it were that buyers were active but for the most part remained cautious and there was no evidence of a collapse in prices.

However the market should begin to pick up considerably next week with agencies able to resume conducting open homes and buyers able to attend live auctions in person, which should start to provide a better indication of where the market might be headed.

You can see details of the properties offered at Barfoot & Thompson's latest auctions on our Residential Auction Results page.

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73 Comments

The vendor of the Manurewa property is going to regret that decision in 3-6 months...

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Clearly the sale wasn't that urgent after all.

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The owners have obviously turned into Gollum with the "my precious" mentallity. They will learn.

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Its been like fishing with dynamite for the banks over recent years.

There is so much societal pride with taking on that debt and becoming a homeowner. Modern day slavery if you ask me.

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I would of grabbed the $600k and run !!!

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The longer I'm on interest.co.nz, I know this sort of comments are more of a wish than prediction.

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I would say its just realism than anything else...we know we are heading for a deep and likely prolonged recession and house prices are going to correct. If your sale is truly urgent why would you not take what can only be described as a very reasonable offer?

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Greed

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Hope and pride.

Emotional transactions never work, whether you be buying or selling.

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A brand new contributor, this one with an axe hes needing to sharpen.

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No need to worry Houseworks, I'm a lover not a fighter.

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I released this some 5 years back and thank my stars for that. Now a days i go straight to the comments section for entertainment.

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REA's and Sellers are going to have to be realistic about property prices in light of the current economic situation if they want to make a sale. Remember most wage earners have been severely impacted by the coronavirus not to mention the flood of Airbnb properties hitting the rental and sales market due to tourism being up the spout.

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"Price by Negotiation" is just embarrassing now.

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So far no sign of any price collapse........

Could the DGM be wrong, yet again? Are we not going to see house prices fall by between 30 and 90 percent?

TTP

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Ahhh Timothy, welcome back. It's early days my friend, we are just at the beginning of what can only be described as an economic catastrophe. I was missing your weekly spruiking...it's always entertaining, particularly as we all now know your "opinions" are linked to strong ties to the property ponzi scheme.

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Hi Albert2020,

Regarding a house price collapse, the DGM have been saying that it's "imminent", "early days", "on the brink" etc, since men wore cardigans and walk-socks.

But note that plenty of houses have sold for well above RV since the beginning of April.......

Several months ago, I warned here that Covid-19 would be a game-changer and I have made clear here - on numerous occasions - that I expect house prices to fall.

But I don't expect the falls to be of the magnitude that the DGM are suggesting. That's blatant scaremongering. The doomy-gloomies want to buy well-located property for tuppence-halfpenny. But it ain't going to happen for them.

Finally, I've contributed here every week this year. Have you been asleep, old fella?

TTP

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What's wrong with cardies? They are my favourite thing to wear in the winter. But I prefer slippers to walk socks ;-)

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Since you're an icon of sartorial elegance, Greg, I must defer to your impeccable judgment.

TTP

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It can't be a 90% fall in property prices! Those sorts of things only happen once in a century ( 1890's).
A bit like the current health scare won't happen again as it did a century ago.....
Stranger (and more frightening ) things than a banks -12% expectation can and do happen.
(NB: And as for "it hasn't happened yet, so it won't" - your reference to the much-maligned DGM brigade. Let's remember Shakespeare: "Better three hours too early, than a minute too late")

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TTP - The DGM's over state any threat to property, all looking for a price drop but I doubt if they would ever buy at any price point drop as it's always going to fall further !
They all have a chip on their shoulders that they have missed out because they didn't buy sometime in the past because property was always over priced and about to drop !

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Haha, yeah I sure do regret not buying a house when I was 3 years old... Kick rocks bud.

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You're just mad you weren't born 20 years earlier!! aahahaha.

/sarcasm

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Did they also have their well worn perspective when selling their shares heavily lower until March. Damn pity.

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Every time property prices were going to drop, the interest rate was dropped to keep the boomers on top. Those days are over.

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Negative rates and no LVRs ahoy!

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Good point. Continuing the strategy we are close to the point where banks really going to pay people to take mortgages.

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Can I ask a genuine question, please? Why do you refer to people who wish to see house prices return to something that even remotely resembles a realistic value as DGM's? Is it not in the best interests of the vast majority of Kiwi's that this happens? It might allow normal Kiwi's to purchase a house for a reasonable price without having a mortgage for the rest of their working lives and not lose sleep at night worrying about how to pay it off. It would hopefully end the greed that is people clambering over each other to use equity to buy rental after rental within the false illusion they are 'helping those that can't afford their own house'.
I understand there a lot of people out there that can't have enough money and don't care at whose expense that comes, however, I sincerely hope out of all this that mentality is changed and people realise what is important. For those that don't, I feel really sorry for them as they will never be happy.....

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Yes, it seems to be a very narcissistic use of the term.

Through most of NZ's history affordable housing has been something to be aimed at, and indeed it was something passed down to the likes of Tim. Yet now the idea of affordable housing for more New Zealanders sees them labeling any exponents of such an idea DGMs? Can such folk not see beyond their own noses?

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DGM stands for Debt Grafting Middleman. The asset and money actually belong to someone other than the risk taker.

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"We've never had a decline in house prices on a nationwide basis. So what I think is more likely is that house prices will slow, maybe stabilize: might slow consumption spending a bit. I don't think it's going to drive the economy too far from its full employment path, though."

- Ben Bernanke, July 2005

Tim, given that you have a similar level of understanding of 100-year-storm risk events as Mr Bernanke I expect I'll be seeing the ‘Property Brokers going into receivership’ headline appearing in Stuff before all's said and done. Your dataset 1986-2019 is thoroughly useless for understanding what is happening because it doesn't include a pandemic that completely shut down the global economy. Amazing that you old boys have such a tough time with what is actually a fairly simple concept.

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Here's a clue!

"pilots to take 30 per cent pay cut"
"would pay everyone 80% of their normal wage"

Those are going to become the norm. And as income and purchasing power falls, so will a commensurate price of asset prices - all of them!
(NB: Mortage Brokers and RE Agents are going to suffer worse than that unless they 'encourage' turnover. And that isn't going to happen at prices from last month, or the few years before that!)

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TTP ...... this is only early days mate ....and I am not making any predictions on how much they may or may not fall, if at all, as there are so many factors, both currently and that will appear in the future ....all I know from your relentless rhetoric on how "nothing could go wrong" is that you have a very heavy wheelbarrow to push in this game and your own equity and cash flow may well be at stake ....so of course you never want a decrease in house prices (or rents) which is understandable ....so with that in mind I take absolutely everything you say with a complete "grain of salt" .....and now hereby crown you Interest.co.nz's "King of the Property Spruikers" and all the "accolades" that go with the title ....do you have Ashley Church on speed dial btw ?

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Hi Crazy,

Please show me where I have said, "Nothing can/could go wrong".........

In fact, several months ago I said that Covid-19 could be a game changer - and I repeated this message numerous times.

I've been very open here about the likelihood of house prices falling on the back of Covid-19.

But I disbelieve the far-fetched predictions of the doomy-gloomies...... As I stated above, they would love to buy well-located property for tuppence-halfpenny - but it ain't about to happen.

TTP

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Prices holding or rising is what's doomy and gloomy for those of us trying to make a start in life.

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Current property owners have the same choice today to that which they had 2 months ago. ie: Sell now or hold on.
The secret to any strategy is: Being able to survive to being wrong.
Many property owners will be fine; 'valuation' means little to them in practical terms. It's just their home and as long as they can make their weekly payments, they're ok. But just as many may not. It is they who will set the immediate prices for the survivors; who will then be faced with the same question - Do I sell now or hold on?

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Agreed. Survival with debt while negative leverage occurs and income is the real issue.

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TTP ....... your property theory is based on your mantra "there has NEVER been a better time to buy than NOW" which may have worked OK up to around 2014 (in Auckland) .....so why aren't YOU out there and buying up "all and sundry" at these current prices ? ......have the banks turned the mortgage tap off because they have a much better understanding of the market than you do ?

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Hi Crazy,

You state above,"so why aren't YOU out there and buying up "all and sundry" at these current prices ?"

Since you have no idea what I'm doing, you'd be better off keeping your mouth shut.

TTP
P.S. I hear that Inglewood and Stratford in Taranaki are good buying right now.

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I live in New Plymouth and you are probably right about Stratford and Inglewood. Stratford and Inglewood became popular after New Plymouth became infected by Auckland house prices. Inglewood is still a commutable distance ~16km. Stratford rates and taxes around at least $3000 and closer to $3500 for a middle of the road house. NP rates and taxes $2600 and I classify my house as middle of the road.

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Taranaki - with the end of the oil prospecting thanks to the Greens lots of upside there at the moment. Have lived there and lots of opportunity for good kiwi lifestyle, surfing, fishing, hunting, biking etc. Would add that was when you not to be up to your eyeballs in mortgage or rent payments.

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Agree with the above comments.......

The smaller centres in Taranaki (such as Inglewood and Stratford) are prosperous enough and provide a wonderful lifestyle - at very reasonable cost.

Have pretty much made my mind up!

TTP

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TTP, are you into Rugby Union by any chance? Good Rugby club in Inglewood...!

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Fair call TTP .....it is really none of my business at all.
I truly hope that things go very well for you, in this ever changing upcoming period, with your endeavours in the Manuwatu/Taranaki region.
Have a wonderful day.

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Yep they will be wrong.
Property will fall between 10-20%. Damage will be lessened if the OCR goes negative.

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I dont know how anyone can put a number on it. It will be a lagging indicator of how dire the economic reality is. Im picking pretty dire.

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Dont think OCR goes negative could help. Banks gonna eat, they wont be charities. If OCR really goes negative, you might want to think about your savings are still there or not.

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3%, and falling, mortgage rates will cushion the vast majority. $300 a week to borrow $500k, which is more than the average FHB loan.

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not much good if out of work, unemployment is expected to double

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How? 500k @ 2.99% on 30 year term = $484/ week. Even at the highly unlikely rate of 0.01% it's $320.

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Interest-only

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It seems to me that if an auction on a house is taking 30 minutes and numerous halts to consult with vendors, the purchasers do indeed have the upper hand. They are willing to walk away or make low bids because they know another one will come along soon.

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Is the April 12 date given in the article right?

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yeap. it was online auction.

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Thank you very much. It is such a long time ago in terms of all that has happened that it is hard to see it is necessarily relevant to the reality facing many today. Ie expectations are considerably grimmer now than they were a month ago.

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Agree. The headline is misleading. These are results from four weeks ago.

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What proportion of properties are now being offered at auction compared to negotiation?

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Hi Voiceofreason,

That depends on the region. It varies considerably across New Zealand.

TTP

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Q: What percentage now have a price listed? A:More, a lot more.

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I don't think house prices will fall much. There are dark and powerful forces at work to keep them high and higher.

The currency will be debased, but house prices are never ever going to be allowed to fall.

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Agree.. the only fly in the ointment is the lack of new renters or immigrants... We were importing a thousand a week... @ 3 per house that is 300 less houses we need per week... So the demand has dried up, although there is much catching up to do.. eventually it will reflect in prices.

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Always possible. That would be an attack on tax payers by the finance community though with Govt endorsement. Election year in case anyone forgot.

Icelandic reset for the win.

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Marketed with development opportunity upside. The issue with specvestor owners is that they want a big chunk of the development profit, for doing nothing. Accordingly they don sell. There are heaps of properties available the are being marketed with " consent for subdivision, or future apartments" etc. Good luck to them. They have missed this super cycles window.

Add in council rating benchmark. Council having jacked up CV to get the biggest rates gouge possible for their $700k etc salaries. Any offer around CV should be seized, unless owner plans a long holding period.

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I agree - local authorities have much to answer for.

Their practices (including their fees for consents, inspections etc) are basically anti-property, anti-community and anti-social.

Ask anyone who's carried out a simple renovation of a family home.

Councils stifle people - and bleed them dry.

TTP

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Buyer's confidence is a very important factor for housing price.But from these auctions, I can see the confidence is definitely not there and so much less than before. Of course price wont collapse, to get the price, both seller and buyer would agree on the price. Seller wont sell at a loss unless something really hurt them. What can hurt them? No income to pay for the mortgage. With 12 weeks wage subsidies, most people are still getting some income. So it wont hurt them now. But later this year? I wont put any hope in housing market at the moment. I am pretty sure most people who have some basic knowlege about economy won't either.

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Agreed. Will be interesting to see. Keep you head down, work and save hard. The winter next year is going to be the time to strike. Id be in the -25% CV camp. Perhaps they will find a vaccine, but if the to date identified mutations are anything to go by, I doubt it.

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Prices and sales will not show big impact til REINZ reports mid July

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So...2 properties sold, and the others didn't get bids near the prices being desired?

Interesting headline to write for that.

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It could be worse. The title could say "auction success rate unchanged since before lockdown". 40% success rate, who cares about volume...

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There are a couple of properties auctioning soon I would like to watch. How does one go about that?

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Will be interesting to watch out, how million dollar houses stands in future and just because we are going to Level 2, do people feel that everything will be fine and will be no job loss, no business loss.......and world will be normal and can forget the virus for now like a bad dream.......

Consequence of Corona Virus has not yet hit as was in freeze mode. Wait and Watch.

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I think the date is meant to be Tues 12 May as that is the date on the Barford & Thompson website

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It's going to be places like South Auckland where the price drops are noticeable. $1.3m homes in the leafy suburbs are going to keep changing hands. But lower decile suburbs and towns where employment takes a big hit are going to see significant drops. Plenty of opportunities in the next 12 months for first home buyers and investors.

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