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Although the number of properties being auctioned is still increasing the rate of growth is slowing as the market starts returning to normal

Property
Although the number of properties being auctioned is still increasing the rate of growth is slowing as the market starts returning to normal
12th Jun 20, 11:23am by Greg Ninness

The latest residential auction results suggest the property market is settling back to normal trading patterns, with the rapid growth in auction numbers of the last few weeks starting to ease back and sales numbers flattening.

Interest.co.nz monitored 166 auctions around the country in the first week (1-7) of June, up 21% on the last week of May.

However that was down from the 71% increase in auction numbers the previous week.

That suggests the initial surge in auction numbers that occurred after lockdown restrictions were lifted is coming to an end, and auction activity is starting to return to normal patterns.

However while the number of properties being offered at auction is continuing to increase, albeit at a slower rate than it has over the previous few weeks, the number of properties sold at auction was unchanged from the previous week, with 82 sales recorded in both weeks.

The static sales number and higher number of properties auctioned in the first week of June meant the sales rate declined to 49% from 60% the previous week.

However prices of the properties that were sold appear to be holding their own.

Where interest.co.nz was able to match selling prices with rating valuations on the properties that sold at auction last week, 64% achieved prices that were higher than their rating valuations, down just slightly from 67% the previous week.

Details of all of the individual properties offered at the auctions monitored by interest.co.nz are available on our Residential Auction Results page.

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42 Comments

by  Adam B NZ  |  12th Jun 20, 11:36am 1591918615

Or... It could be signalling that we are in a Global recession, our economy has taken a hit and buyers appetite for higher prices is starting to come off the boil? Plus its Winter and an Election year... Both historic market coolers.

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by  Crazy Horse  |  12th Jun 20, 12:01pm 1591920061

Whoops ! ....sorry Adam B NZ I mistakenly pressed the red "Report" button - Greg please ignore, thank you CH

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by  Adam B NZ  |  12th Jun 20, 1:38pm 1591925884

All good :)

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by  Miguel  |  12th Jun 20, 11:39am 1591918740

I've been saying for a long time now our economy and housing market have been stoked by high levels of immigration. This has now been completely severed for the foreseeable future (despite people like Ashley Church claiming returning New Zealanders could see a bump in housing demand).
https://www.newsroom.co.nz/2020/06/12/1225937/the-limit-on-nz-incs-migr…

This will start to flow through to the housing market and economy soon, but its being deferred by the Wage subsidy. If a sizable portion of the 300K people on temporary work visa's no longer require housing, or are no longer contributing to the economy, what are the impacts? Unfortunately this short term thinking on supporting the economy with ponzi like immigration has ultimately failed both New Zealanders and those who just came here looking to improve their lives.

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by  blobbles  |  12th Jun 20, 11:48am 1591919289

It's not like that is news Miguel, it's been known that high levels of immigration has been stoking the housing market. John Key literally said that was National's key economic growth policy along with selling more milk to China. Of course stopping immigration is going to bomb it, the only question is if there is enough pent up demand from kiwis who missed out, who can afford to buy, to support the market until they can restart immigration.

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by  stuart786786  |  12th Jun 20, 11:58am 1591919934

If you go against Ashley Church, many on this forum will be offended :)

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by  Crazy Horse  |  12th Jun 20, 12:13pm 1591920786

Yes ! ...he is my "go to guy' on anything real estate in NZ, as I hang on to every word he has said in these past few years ....so one must NEVER contradict or question his findings or reasonings ....or it's off into the "doom n' gloom" dungeon for you !

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by  Foreign buyer  |  12th Jun 20, 1:03pm 1591923836

Bindi is my 'go to girl' on anything real estate. Anything she says, I go to the opposite.

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by  J.C.  |  12th Jun 20, 12:18pm 1591921096

If you go against Ashley Church, many on this forum will be offended :)

As far as I'm concerned, these self-proclaimed 'prophets' play a very risky game, particularly as it pertains to reputation and credibility. It's like the travelling snakeoil salesman of the wild west. When the story doesn't match the expected promise, people realise they've been had and they look for someone to blame. Church would be an obvious target as his stream of consciousness is probably top of mind of many of the Granny Herald audience.

People need to learn to ignore much of this claptrap and realize that bubbles can collapse. It doesn't really need to be said, but sadly many NZers think they know better.

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by  Good Samaritian  |  12th Jun 20, 12:52pm 1591923138

Think you'll find Mr Church has national party political aspirations, or perhaps chief economist for one of the banks maybe.

He used the Property Institute to build his own profile, until they said enough. I think you'll find your next door neighbour knows more about property than this guy.

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by  printer8  |  12th Jun 20, 12:53pm 1591923234

JC
"As far as I'm concerned, these self-proclaimed 'prophets' play a very risky game, particularly as it pertains to reputation and credibility."

I totally agree and this applies equally to a number of posters on this site. We wait and see. :)

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by  J.C.  |  12th Jun 20, 12:59pm 1591923549

Yes. However, I think we need to clearly distinguish between 'self-proclaimed prophets' who occupy the media with the guy down the road who 'reckons' he's got this whole asset market mechanism worked out based on his experience. There are similarities but they're not the same thing.

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by  Nzdan  |  12th Jun 20, 7:27pm 1591946834

PropertyPrices2Fall?

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by  K.W.  |  12th Jun 20, 5:12pm 1591938732

The only returning Kiwis will be unemployed ones. And I don't think the banks are lining up to lend to people without jobs.

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by  Toppertee  |  12th Jun 20, 11:15pm 1591960511

And here is Trademe’s latest property email today..

‘A beautifully presented Island Bay house attracted an almighty 72 groups through at open home last Sunday, meanwhile, an Auckland home in dire need of some DIY attracted 27 offers and sold for more than $1.5 million.

These are just a couple of examples of intense buyer interest being reflected in this June market – and engagement on-site with Trade Me Property from keen buyers supports this, with both email enquiries and Watchlist adds being well up from this time last year.

Thinking of selling? Now could be the time. What would normally be a quieter market come late June, is likely to become a bustle of activity as buyer interest is predicted to extend into the coming months.‘

Not widely known or publicised Anywhere but they too are restructuring a 20% staff cull.

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by  Yvil  |  12th Jun 20, 11:44am 1591919091

Uneventful

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by  bw  |  12th Jun 20, 11:53am 1591919607

On the contrary!
Last week was a fabulous week when the last family prisoner of property market escaped with just a flesh wound making his break for freedom.
The member who missed getting out of Growth into Cash 8 weeks ago, so converted her future savings on Friday night
Now? It doesn't matter....

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by  stuart786786  |  12th Jun 20, 11:57am 1591919854

So it is Higher Volume - volume increasing and number of sale decreasing. Sold higher than RV though slightly down but is still good.

Important to wait for October / November Data

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by  b21  |  12th Jun 20, 12:28pm 1591921702

Won't have to wait so long as traditionally winter is weakest when it comes to the RE business, on the other hand I would start being cautious about the data being reported, specially if it comes from REINZ and lobbyist alike as it is in their own interest to keep the bubble so all negative data that may make it burst will be obfuscated to say the least.

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by  Averageman  |  12th Jun 20, 1:08pm 1591924097

It will be a long winter for agents, with the removal of artificial subsidy's on the back side to boot.

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by  richard1965  |  12th Jun 20, 12:07pm 1591920439

Was checking Manukau auction result and can see that houses that are been sold in Auction are going at good/high price. May be Houses that offef good value and presented well are still going at premium (May be slightly less than before lockdown but still at premium).

It is still wait and watch till election as freebies should run out or/and would be stopped after regaining the power.

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by  Rob Reid  |  12th Jun 20, 1:21pm 1591924870

Thanks Tai - did not see this one. What used to be a revelation is now so obvious it has even hit the mainstream.

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by  Hans Brink  |  12th Jun 20, 8:00pm 1591948854

Yep the trickle down theory is dead. Never worked.

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by  Brutus Iscariot  |  12th Jun 20, 12:51pm 1591923076

Just look at the auction results from Barfoot. Most stuff is getting passed in, but quality properties are commanding a big premium. I know, i bid on one and failed!

Hugely bifurcated market, driven by cashed up returning expats at the top end.

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by  Toppertee  |  12th Jun 20, 11:17pm 1591960663

Most returning ex pats are hitting the dole if you care to look at the numbers.

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by  Chairman Moa  |  12th Jun 20, 12:58pm 1591923499

If the NZ housing market is the Titanic. This is where they spotted the iceberg and the captain announced to his crews that this Titanic ship is unsinkable..
Meanwhile Jack and Rose (the buyers) are still eyeing out each other!

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by  nk_tokyo  |  12th Jun 20, 12:55pm 1591923359

Have offers in on 6 properties right now. Focus on yield in good areas. I'll be the ginuea pig and ifthe world ends I'll report back.

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by  Chairman Moa  |  12th Jun 20, 12:59pm 1591923546

Will keep an eye out for the Go Fund Me page..

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by  nk_tokyo  |  12th Jun 20, 3:13pm 1591931586

Tickets to Fiji needed for someone who did not heed the comments in the warning section in time...

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by  printer8  |  12th Jun 20, 1:00pm 1591923622

nk_tokyo
"Have offers in on 6 properties right now."
Just checking here - so you have offers on six properties "right now"; so if all six offers are accepted you are buying all six???
Cheers

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by  nk_tokyo  |  12th Jun 20, 3:10pm 1591931431

Yip. I have low LVR and good cash flow on a small portfolio and the LVR drops made it easier.

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by  printer8  |  12th Jun 20, 4:22pm 1591935756

nk
Wish you well - and that is not being facetious.
Not surprising that there are those on this site laughing at you.
If yields are fine there should be no problem as there appears a shortage of rentals despite ex-Air BnB owners scrambling for long term tenants, and international workers on working visas heading home. It may be an issue in Queenstown but that doesn't apply nationally.
The key point at the moment is that in many areas there is a shortage of social housing. Blame National for selling state State Houses if one wants to, but that is the reality of the market at the moment and there is opportunity there. It will be some time before the Government promise of the much needed additional housing to be built will be completed - if at all.
I have seen plenty of posts on this site saying all is doom and gloom in terms of over-supply of rental properties and that landlords will have difficulty finding tenants able to afford properties. There may will be regional instances of, that but in other regions it is bollocks on two accounts - 1. accommodation supplements and 2. housing shortages.
Can't speak for all areas but from what I am hearing (here in the HB, at least parts of Auckland, Hamilton, Gisborne) from those involved - and no need to be anything but honest with me in their comments - is that currently there is great demand for rentals.
Somebody I know well here in the HB let a property post-Level 4. They had over 60 applicants, had three offering to pay above asking rent (likely covered by accommodation supplement. Also had an approach from MSD willing to manage the property, find tenants, guarantee rent, and meet the costs of damage free of charge (rather than the 8 to 10% charged by commercial property managers) but didn't touch it.
This is one illustration: https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12338106
From what I see and hear, we have at least four motels totally booked out by MSD and at least four others with "homeless" - and that is just here in Napier and apparently average cost over $1000 per room.
Also an account of a motel - average quality - in Hamilton is that it is fully booked out and with MSD paying up to $1500 per week per double room. Go figure.

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by  printer8  |  12th Jun 20, 4:42pm 1591936958

nk
Since my post I see in "What happened Friday" that comments on rents support my comments.
"Median rents for an Auckland three bedroom house rose sharply to $695/week in Auckland, a new record high and up +6.9% in a year. "
Maybe those on this site who jump on any FHB commenting about buying need to note this.
Housing shortages - and I acknowledge accommodation supplements - are most likely affecting rents.
The reality is that those who are on reasonable and secure incomes - and who are renting - are currently being disadvantaged by the effect of accommodation supplements.

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by  Mrs The Point  |  12th Jun 20, 1:10pm 1591924216

There are good areas that provide a decent yield? Not looking in Auckland then?

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by  Fritz  |  12th Jun 20, 1:12pm 1591924346

What sort of yield is acceptable to you, generally speaking (noting there is some nuance).
And which market?
Very hard to find much in Auckland offering north of 4-4.5%.

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by  nk_tokyo  |  12th Jun 20, 3:11pm 1591931494

Rotorua, Welly, Southland. 2 each.
Auckland is harder for yields, that's for sure. Need a twist or multi income... possibly both.

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by  Chairman Moa  |  12th Jun 20, 3:19pm 1591931972

An old workmate of mine bought block of 4 flats in Tokoroa for no more than 400K, at the moment he's renting out and returning 16%. He's eyeing another in Putaruru with similar returns. There is zero capital gain but the returns in enormous and courtesy of NZ Tax payers.

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by  printer8  |  12th Jun 20, 4:28pm 1591936098

Chairman
Quite well believe it.
While he may be getting 16% yield, that may well be leveraged considerably by mortgage at 3% so yield on equity will be exceptionally high.

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by  NZChinese  |  12th Jun 20, 1:17pm 1591924673

This pandemic has put a full stop on immigration, and end of the story.

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by  Ben72  |  12th Jun 20, 1:30pm 1591925426
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by  CN  |  12th Jun 20, 2:33pm 1591929211

We're all currently facing the same impending fiscal hurricane, yet people are in different boats (i.e financial circumstances). Some are well positioned in sturdy cruise liners, others are in a poor leaky dinghy ...

Excerpt from the article link:
"What has been difficult is that all of our expenses and our mortgages have been set up as a two-income family. We've always been full-time employed, our mortgage reflects two full-time incomes … so it's been a real kick."

How many highly mortgaged households with high debt service ratios are in this same set up in NZ? Then something unexpected happens. How many highly mortgaged households with high debt service ratios in NZ are impacted financially by any of the following (either one or both of the household income earners)?

A) Employees:
1) reduced working hours for wage earners
2) salary cuts
3) lower commission income for commission based employees
4) unemployment
5) other

B) For small business owners:
1) significantly reduced profits from the business which means less profits on which owners can pay themselves dividends or owner drawings
2) losses in the business
3) losses in the business & inability to get additional capital for the business to survive

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