A surge of properties offered at auction wasn't matched by the rise in sales at Barfoot & Thompson's auction rooms

A surge of properties offered at auction wasn't matched by the rise in sales at Barfoot & Thompson's auction rooms

The number of homes being auctioned by Auckland's largest real estate agency continues to grow strongly, although the sales ratio dropped back sharply last week.

Barfoot & Thompson auctioned 85 residential properties last week (1-7 June), which was an 89% increase on the 45 properties the agency auctioned in the last week of May.

The Orders of Sale published by the agency for this week show the number of properties being auctioned is continuing to rise, suggesting the market is well on the way to returning to normal trading patterns following the progressive removal of lockdown restrictions.

However while the number of properties auctioned by the agency showed substantial growth last week, the number of sales achieved at auction was more tepid.

Last week Barfoots recorded 35 sales at auction, giving an overall sales rate of 41%, while the sales rate at the individual auctions ranged from zero at the Shortland Street auction on June 4, to 50% at the North Shore auction on June 4 (see the table below for the full breakdown)

That compares with 29 sales overall at the previous week's auctions, which was a 64% sales rate.

Sales rates have been very strong in auction rooms throughout the country since they reopened after lockdown, possibly due to a build up of unsatisfied buyer demand and the limited choice available as the market slowly came back to life.

The drop in the sales rate last week may be a sign that the pent up demand could be starting to be satisfied, and the increase in choice that more properties coming onto the market is giving vendors may be starting to make them a bit more picky.

However it's probably too early to draw any firm conclusions on those trends and it will likely be the end of the month before a clearer picture emerges of where the market is sitting.

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

The comment stream on this story is now closed.

Barfoot & Thompson Residential Auction Results
1-7 June 2020
Date Venue Sold Sold Prior Sold Post Not Sold Total % Sold
2-6 June On-site 5     7 12 42%
2 June Manukau 9     15 24 38%
2 June Shortland St 3     3 6 50%
3 June  Shortland St 7   1 9 17 47%
3 June  Pukekohe 1     2 3 33%
4 June North Shore 7 1   8 16 50%
4 June Shortland St       3 3 0
5 June Shortland St 1     3 4 25%
Total All venues 33 1 1 50 85 41%

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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89 Comments

24
up

Give it 3 months and demand should be gone and supply from AirBNB and rentals hoping for reopening of borders will start to up supply as we are unable to open borders with anyone except Pacific Islands as the virus will still be spreading freely.
Also temp visa holders will be shown the door as jobs will not be available as business cuts costs further to stay afloat.

15
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I agree this virus is not going away anytime soon. Brazil just gave up reporting the numbers because its out of control and it is now cutting loose in India and Pakistan. Potentially its here to stay, not holding my breath for a vaccine. There will be a pent up surge under level 1 for a couple of weeks, especially in the $700K "Affordable" bracket but it will go over the cliff after that.

13
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Australians are also experiencing a lot of difficulty in their property market too, which is slowly sinking due to covid-19. Most are predicting a -20% to -30% drop in prices. Partly due to an influx of Airbnb properties as the Sky article highlights. It also mentions how REA's are trying to hide the fact the their market is in decline. Sky New Australia: Australia’s property market is ‘slowly sinking’. https://www.youtube.com/watch?v=0uTC4gNOCdU

So the Oz market is overpriced as well, despite the fact that they have Capital Gains Tax!
Prices are so much higher in Sydney and Melbourne than here.
Many on Interest.co have said they are off to Oz because prices are too high here!
Good Luck.

What do you think about Perth there TM2.

Sydney: down 0.6 per cent or $9,692 to $1,016,726

Melbourne: down 1.1 per cent or $9,532 to $809,274

Brisbane: flat at $559,975

Perth: down 0.6 per cent or $4,155 to $461,366

Adelaide: up 0.4 per cent or $2,045 to $478,294

Darwin: down 0.9 per cent to $473,861

Hobart: up 0.8 per cent to $514,496

Source: CoreLogic Hedonic Home Value Index data for median house prices, May 2020. Dollar figure movements based on April 2020 data before revisions

Yep and remember the Chinese won't be back anytime soon to help push up house prices again and get everyone else in to more debt, who has to compete with them and the money laundering. Not with the cold trade war brewing between and Australia which is likely to continue.
Hopefully the Aussies will look on the bright side and realize that letting their house prices fall to affordable wage earner levels is a very good thing!

Hi Biased_Observer,

Those price falls are minuscule.....

Clearly, the Aussie market is pretty resilient - much like the Kiwi market.

You'd be better to "tell it as it is" - rather than attempt to pull the wool over readers' eyes.

TTP

Oh good grief. TTP (Tim), it's only REA's like you that are constantly in denial and are trying to "pull the wool over readers" mostly for First Time Buyers in a desperate attempt to keep your over bloated commission rates up!

Here go watch the Sky news bulletin again and pay attention to the part that mentions how Real Estate Agents (like you) are trying to withhold selling price information. Australia’s property market is ‘slowly sinking’. https://www.youtube.com/watch?v=0uTC4gNOCdU

Most countries have a CGT what does that have to do with property prices ?

$700k does seems to be the magic number. I just got a relatives property sold at that price point in Queenstown. Way below a recent valuation of the property and no interest at all when offered at "market" value.

Its not only an appealing number for FHB but also for those approaching retirement and looking to downsize.

17
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Maybe we're about to get a reminder about who actually sets "market" value?

This is not an appealing number for FHBs. Don't be ridiculous.

Carlos67 - In your dreams the housing market will go over the cliff , there is pent up demand for sure that will work through the system but after that there are plenty of capitalized buyers waiting for a canny purchase. This is a big event but it is the most Government supported recession in history, assets are primed for a lift, be in or watch from the sidelines !

With large companies firing by the thousands these days it is quite safe to say this will be the trend for some time, more offer and less demand. Lower prices for those can can still buy, which hopefully won't bring more inequality, in which case the Government may need to swiftly step in.

12
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That and the impact of reduced immigration (and the uncertainty of the 1/4 of a million people on work visas).

We really haven't seen the true impact, as the governments actions have shielded us from the worst of it while the lockdown was enforced. Now that we are out of lockdown the temporary measures will have to be dropped, the tide will go out and we will see who's swimming naked.

Agreed. If people were on from the get go most would be stuffed already.

I think immigration has been always overestimated by most analysis I have seen, most do not take into account that most people arriving to the country rent for a few years, many in small households and even sharing with many which adds little pressure to the market, furthermore most cannot afford to pay to have their own house with current market prices except for the few richer exceptions. Given the time if they decide to stay they may think of buying but it is a hard task for most. Big influx of capital that looks for profitable investments on the other hand, from both internal and external sources is a much stronger actor in rising house prices specially during periods of relatively cheap debt.

Increased competition for rental properties does push up house prices. Shortage of rentals properties allows landlords to increases rents (pushing up yields, increasing the price investors are willing to pay). The more competition for rentals forces more renters into buying (due to shortage of good rental properties at decent prices).

These impacts are often delayed, so even as immigration drops off it may take some time for these drivers to dissipate.

10
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It's only a slight glitch in the Matrix..
We are on Level 1 now and everything is hunky dory, get in there and buy some, buy anything..

So we're in for some changes?
https://www.youtube.com/watch?v=NsK5DKrPpvo

Chairman, that is a silly thing to say, buy anything?
No, buy only if you are buying with your head rather than your heart!
Buy right and you can not go wrong, in the right locations!

24
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wooooshhh...

11
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Avoid areas that have been struggling for some time like Christchurch and the new areas that are now struggling like Queenstown. Where I live the agents and the bank managers say they are very busy but I have to say where I live people want to come here as first of all we are in the North Island and it is a very pleasant place to raise your family.

15
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Just avoid Tauranga if you don't want to lose money. The house prices were pushed up way too much by cashed up Aucklanders. The house prices are actually some of the most unaffordable in the whole world compared to earnings. 'Ten dollar Tauranga' wages are obviously not that great, not that there are any jobs. Plenty of other much nicer places with less people and traffic and not so many 'new money' snobs who feel superior because their house is now worth a million, even though they are in fact very poor and are struggling to keep that 1994 Subaru Impreza on the road?

10
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SPOILER ALERT: It was worth a million.

Quite the opposite Gordon.
You buy where the market is stable and we all know that is Christchurch.
Even Jordan Mauger has headed to Christchurch for lifestyle?
He said he is sick of living in Auckland where it is now dominated by immigration.
Gordon, opportunities in Queenstown as weall if you know what you are doing!
Take me up on the challenge Gordon

12
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You must be happy your weather, isolation , lack of opportunities and your abundance of skinheads keep immigration to poor old Christchurch to very low numbers if any.

It is all about quality of life Gordon!
ChCh has it all

TM2
"buying with your head rather than your heart" then my head would say don't buy CHCH because the earthquake hype is now over, not much jobs or opportunities.
My head would say head over to Wellington, where I grew up and that is where my heart also.

Lots of builders in CHCH but work will dry uo over next 3months then we will see some cheap pickups on Trademe.

Agree, Wellington looks pretty good. Heaps of bureaucrats on high incomes with amazing job security. And almost no land to build new housing!

Maybe but will government cut consultancies and contractors over next two years? What impact does immigration have on Wellington housing? If central city prices have not be rising as fast as regions does that indicate an affordability ceiling was approaching? What will bank losses nationally mean for lending everywhere in the medium term?

Chairman, that is what I love about real estate, and why we have been successful?
If you keep putting people off then you are doing a good job for us.
Keep your head and heart in Wellington and I will be able to keep buying well.
I will put our 8 figure property portfolio up against your investing any day!

7 figures of debt too?

Yes you are correct, but we can pay all the debt off, if we wanted to, however not economic sense to do so!

Only if you can sell some of your portfolio which in this environment isn’t a given.

No, don’t have to sell any property at all!

The secret of being successful is not boasting how well you are doing, or I am richer than you! Have you seen Bill Gate saying he's so rich, or Jeff Bezos comparing his wealth against Bill?
If something is working well for you then why the hell telling everyone about it, keep it as a secret...! McDonald, Coke, etc.. never reveal the secret ingredients that make them rich.

This short clip would seem appropriate here. Classic Harry Enfield sketch. https://m.facebook.com/watch/?v=343600346365075&_rdr

Brilliant Harry Enfield sketch. I would put Benny Hill, Rick Mayall ("The Young Ones"), Ricky Gervais (''The Office"), and John Cleese ("Faulty Towers") in the same league as Harry E. British comedians are the best, no doubt. Though strangely, I could never take to Monty Python. And I can't stomach American attempts at comedy.......what was all the fuss about "Mash", puerile. Americans just can't do comedy... you can see the obvious 'joke' coming five minutes before it's delivered, and it's delivered with a sledgehammer. And most NZ comedians are cringe-worthy.

Sledgehammer ...comedy at its best

Chairman, This site is designed to assist people make financial decisions!
It is with this in mind that I post so that people looking for assistance can actually see what can be done!
If everyone read the doom and gloomers posts, they will not invest or get ahead!

If I was an investor looking to invest, I would read just the actual article, along with my own research. As for the comments, being a free website I would take them with about half a ton of salt. Do you think people takes your comments and mine seriously? If you do, see a headshrinker asap.

A group of seagulls fighting over a few morsels have more sense than the bulk of commenters

CM remember he is a “professional” investor. We all need to take him very seriously. LOL.

You have finally learnt Gordon.
Challenge?

Dont think Wellington is very attractive for property investment at the moment. Wellington has highs risks of earthquakes and tsunami. This put the insurrance costs quite highThere is also only one way to extract from city. Property investment is more for long term. With Climate change at the moment, who knows what's going to happen in future. After 10 years, some areas in Wellington might not be liveable. The reason why Wellington property market is booming is investors left Auckland Market and were looking for other cities to invest after 2016. Wellington was on top of their list.

"However it's probably too early to draw any firm conclusions on those trends and it will likely be the end of the month before a clearer picture emerges of where the market is sitting."

Probably need to wait until at least until after mortgage holidays and wage subsidies expire.
However, a quick squizzy at Auckland sales at auction over past week indicated that slightly more sold above 2017 RV than below. So that much vaunted bubble burst has yet to materialise.

11
up

So that much vaunted bubble burst has yet to materialise.

Trust me. The bubble could have already burst and you could be (and likely to be) blissfully aware. That is usually the nature of how property bubbles burst.

JC
No problem. Cashed up, watching and waiting.

OK, so what you really want to say is "I'm alright Jack" instead of "there is no evidence of a bubble." If you're "cashed up", there seems to be oodles of opportunity (well at least ther has been in the 2 months) waiting for you besides buying houses.

No JC
Just simply waiting for the much vaunted bubble burst that you and others post about.
Property has very good long term security, potential capital gains and yields are still better than cash; so yes, I waiting simply because that opportunity is just going to get so, so much better in terms of the potential yields and medium to longer term outlook for (currently tax-free) capital gains.
A hot tip that you should consider - get into property as a FHB or as a investment. And they tell me mortgage rates are likely to even fall further to leverage that equity in terms of capital gains. But you will need to ignore the envy-fueled dgm comments on this site.
Cheers :)

Have you ever read any of Robert Shillers books p8? The property section of Irrational Exuberance is excellent and may help give you a fuller appreciation and clear up any blind spots (if there are any). You may know everything he talks about already, but you may not as well - would be a win/win either way.

Did Robert Schiller make a fortune in property?

15
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Didn't need to because he was earning wages!

Funny how both yourself and P8 appear to think you're more intelligent than a nobel prize winner.

'Who'd want to read a book by a guy with a nobel prize in assessing asset prices, why would I waste my time with that?'

Haha NZ and our property investing culture is a bit of a joke sometimes.

No one makes a proper fortune in small scale buying of residential real estate. It where older middle-income earners play to make themselves feel like savy businessmen.

Buy and hold assets (housing & shares) for a long time. It's not rocket science, its just time.

IO
Read your comments though.
As you posted you have been saying a bubble burst for 5 years. In that time - from memory as currently at the gym - NZ median prices up by over 40% and Auckland up by over 27%.
I see you were suggesting 50% fall in prices (albeit you have been squirming out of that) so we wait and see.
Shillers not somebody you follow then?
If so on your track record I’ll pass on your recommendation but thanks.

11
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Fine - he picked the housing bubble in the US and has a nobel prize for assessing asset prices, but yeah who cares.

Better off just listening to Ashley Church there p8 for your insights.

Oh and by the way, Shiller started warning about a property bubble in the US in 2003, about 5 years before it all fell apart. So you can dismiss my views if you like as they don't fit a confirmation bias.

IO
Yes, even the bunny who picks a horse by their luck number will be right some of the time. That doesn't say much about their ability to pick horses all the time. And no, I don't have any time for Ashley Church; I do not slavishly following any commentator.
I come to my own conclusions by reading comments by reputable NZ economists including bank economists (all of who get regularly rubbished on this site by the all knowing key board warriors), talk to people with whom I have connections and have some current knowledge (in the last four days two extended family one a mortgage brokerage and the other commercial lending in banking, and close friends who are long time property investors), and most importantly look at data and look for trends.

I look to having some substantiated discussions on property and market trends with you.

I find many of the comments on this site are unsubstantiated envy-fueled comments by key board warriors.
I refer you to this post by JC in response to a post listing a number of reputable commentators on the eve of lockdown:
"by J.C. | 21st Mar 20, 5:06pm
Some or all of these people quoted here run the risk of being perceived as frauds or con artists into the future."
It works the other way too.

I really hope that we can get substantiated discussions. I acknowledged a posting a few days ago arguing a significant fall in the market a few days but the great thing was it was substantiated.

Perhaps if you were to read some books like that of Robert Shiller's we could improve the quality of interchange. Just trying to lead the horses to water but they don't appear to be thirsty (most already know it all)!

If you're comparing Tony Alexander to Robert Shiller well yes - one has a nobel prize for his work on asset pricing, the other worked for a bank and/or for property investment interests.

15
up

Lol "Currently at gym". Jump on interest between reps while flexing in the mirrors?

NZDan
No. I am now at an age where I avoid looking in the mirror.
Just because you may, that doesn't necessarily apply to all.
Cheers

Just simply waiting for the much vaunted bubble burst that you and others post about.

You must have the wrong person as I have never posted here about the bursting of a property bubble in NZ. It would go against my belief and philosophy about the nature of bubbles. I cannot confirm or deny the existence of a bubble.

JC
In that case I stand corrected.
Good to see someone distancing them self from any claim of bubble burst - some decline, yes.

A hot tip that you should consider - get into property as a FHB or as a investment. And they tell me mortgage rates are likely to even fall further to leverage that equity in terms of capital gains. But you will need to ignore the envy-fueled dgm comments on this site.

Thanks for the advice. I don't need a house nor do I need any housing investments. The idea of leverage makes sense. For ex, if you had invested $10k in Hertz the day after the company's bankruptcy was announced in March, you would have $125K now. That's an extra $115K you could have for speculating on NZ house prices.

JC
Happy to hear you have no need of a house, each to their own.
Re Hertz; hindsight is a wonderful thing.
Wish you well.
P.S. I did note a comment of yours in a post above.

Re Hertz; hindsight is a wonderful thing.

It's crazy if you ask me. 12x on a bankrupt company in a matter of months. Anyway, don't want to prick your bubble, but I doubt you're going to see that kind of return on NZ houses.

How low do you reckon they will go? under 2%?

10
up

Of course slightly more sold above 2017 RV than below. They were passed in if they didn't go above CV. Reality takes time to sink in...... but it will.

Yep. Say, 55% above RV when only 50% are sold means 27.5% above RV in reality. In other words, 72.5% not sold above RV.

Not the best phrasing there

better would be 27.5% of auctions met reserve and sold above 2017 RV

CJ
Your premise is flawed.
Do I need to explain it??????

What is happening in stock market - touching all time high is so confusing that one can not understand what printing of money can do to asset class.

Earlier before lockdown experts were worried about PE ratio which was at all time high but today is worse as EPS has fallen of many companies as a result PE ratio much higher and if can say on dangerous level, still no sign of stock market taking back seat despite panademic and world comming to a halt.

So is definitely wait and watch for housing market as should definitely be soft, if not a crash but one does not know what more printing of money can do.

Money printing causes price inflation. The balance between the deflation due to SARS-CoV-2 and the inflation due to money printing / low interest rates is what you are trying to predict . Logically one would assume that houses prices will be supported by the Reserve Bank. One could expect prices to be stagnant for a period of time. That would effectively mean they are decreasing in value as the dollar printing machines flood the system. I just assume that if you buy today in 5 to 10 years it will have been a good move.

The thing about zombies is they keep rotting. You can apply more and more make-up to make them look pretty, but at some point the cheeks are going to fall off.

I wish there was a lol emoji on here sometimes.

12
up

All asset class be it stock or housing has been artfically supported by easy and cheap money and with a crisis that has never experienced in life time followed/supported by printing of money by each and every government may give some breathing space but cannot avoid the consequences of panademic and entire world economy comming to a halt with all borders being closed not for days or weeks but for months.

So agree with you wait and watch as it will get worse before getting better.

richard
An astute observation.
Whether one agrees with QE or not, it is the reality of what has happened and needs to be considered when discussing asset (both equities and housing) prices.

After selling 64 homes in the past two weeks, "the pent up demand may have been satisfied." Even Bindi would struggle with that grasp of the ridiculous. Even Bascand sees housing wealth falling by at least 120 billion.

Cowpat I think I might be part of the pent up demand but there is zero chance I would buy at this price level. I say I think because I've visited a lot of construction sites since I returned to NZ and the quality of the houses leaves a lot to be desired. The walls are like cardboard in allegedly high end developments. I like ICF construction and even that here looks like it could be knocked down with a sledgehammer.

Bottom line I may end up building once the demand for tradies evaporates.

Number of listing for auctions being high can also indicate that many who wants to sell are rushing as worried that house price may fall in future. So what will be important will be percentage of sale and at what price it is been sold by vendors.

Still to early as will know when freebies by government is over and that will be after the election.

Currently was checking Manukau area and houses that have been sold have gone for good/high price and does not show that virus has had any affect on their high price.

I think the south is well placed. Lots of transport infrastructure coming there

If the number of houses for auction goes up and sale goes down, the number of unsold houses goes up (though some may sale after auction with comptomise price).

We sold our house in Auckland in Early Feb this year and looking to buy again. There is a lot of supply coming on to the market right now and open homes in the last 2 weeks have been quiet.

16
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Wait 6 months and you will save yourself a fortune.

Or not. Nobody really knows for sure.

The Smug Club have been more than usually vociferous today at the prospect of an inevitable house price crash. Are they for real, or are they acting out some wishful role in a fantasy of their own making?