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Steady auction activity suggests the housing market is settling into normal winter trading

Steady auction activity suggests the housing market is settling into normal winter trading

Residential auction activity at Barfoot & Thompson has remained steady as the market settles into winter trading.

The agency marketed 97 properties for sale by auction last week (22-28 June), exactly the same number as the week before and barely changed from 102 the week before that.

Auction sales have also settled around the 50% mark, with Barfoot achieving sales on 44 of its auction properties last week, giving a sales rate of 45%, compared to 51% the previous week.

The stand out success in Barfoot's auction rooms last week was the Manukau auction which had a 62% sales rate, while the agency's biggest auction of the week, on the North Shore, had a 41% sales rate (see table below for the full results).

Perhaps surprisingly given current economic uncertainties, Barfoot's auction activity is continuing to run well ahead of where it was at this time last year, both in terms of the number of properties being brought to auction and the sales rate.

In the equivalent week of last year (17-23 June 2019) Barfoots marketed 71 properties for sale by auction and sold 28 of them, giving an overall sales rate of 39%.

Details of the individual properties that were auctioned and the results achieved can be viewed on our Residential Auction Results page.

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Barfoot & Thompson Residential Auction Results
22-28 June 2020
Date Venue Sold Sold Prior Sold Post Not Sold Postponed Withdrawn Total % Sold
27 June On-site 2     2     4 50%
23 June Manukau 7 1   5     13 62%
23 June Shortland St 3 2   8     13 38%
24 June Shortland St 9 1   10 1 1 22 45%
24 June Pukekohe 1           1 100%
25 June North Shore 7 5   16   1 29 41%
25 June Kerikeri       1     1 0
25 June Shortland St 3     1   1 5 60%
26 June Shortland St 2 1   6     9 33%
Total All venues 34 10   49 1 3 97 45%

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39 Comments

The only way is up!

Is this sellers looking to get out of the market now prepared for realistic prices.

where sellers are meeting buyer demands rather than buyers meeting seller demands.

The swinging pendulum of the property market

No, it is buyers looking to get into the market now prepared for realistic prices.

It looks like there's not going to be much of a lull in house price increases.

TTP

Perhaps surprisingly given current economic uncertainties, Barfoot's auction activity is continuing to run well ahead of where it was at this time last year, both in terms of the number of properties being brought to auction and the sales rate.

Should note that market from October 2018 to August 2019 was down before it picked up again with a bang. So conclusions can be drawn....

At the same time, houses that are being sold in Auction, are going at premium so still the market is buoyant and what happens in future is to be seen.

While care needs to be taken in drawing conclusions, these results are not indicating signs of a significant collapse of the market as predicted by many on this site.

One needs to be a little cautious in interpreting auction results as they are limited in number and not necessarily reflective of the wider market; however they do give the best "current time" indicator of what is happening. Comparison of selling price with RV are also suspect but at least provide some indication.
There is still quite a lot of uncertainty as to both the full economic consequences of Covid and what effect the end of the wage subsidy scheme will have. However, these results do not reflect significant falls and I note even some bank economists seem a little more positive than their earlier predictions.

Doing your best to be earnest I see on the sale of 34 homes. What did they teach you about statistics in the palace of wisdom from which you were educated?

JC
They at least taught me to read . . .
Clearly you didn't or couldn't read my comment" . . . little cautious in interpreting auction results as they are limited in number"

Here we go again.

Norhtman
Yes, clearly the auction results not fitting the narratives of many such as JC
;).

CoreLogic update on my home as at 28/6 was 101% of 2017 CV ($2,500,000). It appears to be going nowhere, neither up nor down. However that won't stop the comments. I liked Orr's words this morning, "we prepare for all possible eventualities" certainly safer than putting a forecast out there then suffering confirmation bias each week when the auction results come out.

Ex Expat
I agree with you that there seems "It appears to be going nowhere".
The good things about CoreLogic's data that it includes all property sales (agent and private) and it is taken over a three month period so tends to limit fluctuations. However, by its nature, being over a three month period CoreLogic data is slow at picking up any changes which is particularly important as to what the market is currently doing.
REINZ data is based on sales when they go unconditional - so even thought they are monthly the data they are based on agreements they may be have been signed up to two or more months previously.
While auction data has its limitations - as I pointed out - it is the best real time indicator of what is currently happening although it has considerable limitations.
I still remain a little cautious of what is going to happen - for example, beside Covid related issues, the elections in both NZ and US are currently important factors influencing the economy and consequently housing.
I cashed up my TDs, sitting on my hands, watching and waiting. A property investment is an option and in that regards indications from auction data provides a important signal.
Forsyth Barr's newsletter this morning contains an important point that is not only relevant to equities but also housing:
"Following the strong rally in equity markets — and in the face of artificially low interest rates for a very long time — it may feel tempting to jump into equities with both feet. As enticed as we are by the relative return potential of equities and the prospect of economic recovery, our analysis suggests keeping a little bit of powder dry. Equity valuations look fair for a normal interest rate world (and cheap if rates stay low), but economic and political risks globally remain, and so we could face months of alternating waves of pessimism and optimism. If economies, earnings and interest rates do recover quickly then valuations could perversely come under pressure, a la taper tantrum of late 2018."

Safe but no fun.

little cautious in interpreting auction results as they are limited in number"

Like I said, making an effort to be earnest possibly to look discerning and prudent.

In statistics, a sample size of 30 is the lowest one could go to make statistical comparisons significantly possible (central limit theorem).

In other words, a sample of 34 sales is practically meaningless to make inferences about the market.

JC
You clearly have not been considering auction results over the past weeks with which these results are consistent.
Tell me if you have any better current data because it is sounding like you simply don't want to acknowledge these results.
My initial posting acknowledges limitations of auction data - and more than just sample size.

You clearly have not been considering auction results over the past weeks with which these results are consistent.

Doesn't matter. 34 sales is 34 sales. Even if the past weeks also comprised 34 sales, it doesn't make it any more valid from a statistical POV. A rule of thumb is that any sample <30 is statistically invalid for making inferences about a population.

There was an article yesterday reporting 4 commercial properties sold in Hamilton and comparing divergence from the Auckland commercial auction. There will never be 34 commercial properties for auction at one time. So what to do, ignore that sector entirely ??

There was an article yesterday reporting 4 commercial properties sold in Hamilton and comparing divergence from the Auckland commercial auction. There will never be 34 commercial properties for auction at one time. So what to do, ignore that sector entirely ??

Any serious analyst could only make spurious inferences about a market based on 34 sales. Even less so with 4 sales.

Right thanks JC that was tongue in cheek comment you missed

There are multiple economists have confirmed that we will be going through a recession, that's also why we have low interest at the moment. It sounds like you know quite a bit about investment and economy. You must know what is recession then? When recession happens, there will be deflation which means assets prices will go down. It might not being showing straight away. But it's just a matter of time. I understand you don't want to see housing price to go down as you might own quite a few out there. But you need to understand the situation by listening to other experts. But if you feel you have better understanding of economy than the economists, oh well, good luck...

Its going to tank. Just as soon as the wage subsidy ends and the mortgage holiday is over. I'm now active in the market with cash and looking for a bargain. If your in Tauranga and want to get out with a 20% less than RV on your property, post the Trade-Me link.
https://www.youtube.com/watch?v=HEI3GIU5m3s

Wow now unemployment, population growth and consumer confidence does not matter in housing market best advise from one of the Spruiker agency :

https://www.oneroof.co.nz/news/38079

May be correct as now economy is not running on fundamentals but on printing of money. So message is do not worry as government reputation is more at stake and to get vote/power will do anything and everything to ensure that ponzi continues and mint is open for printing as long as it takes.

That's Ashley Church suggesting that actually understanding what drives markets is a futile activity. All you need is that housing cycle is a force of nature and prices double every 10 years. He could be right but so could be the 7th Day Adventists. Nevertheless, if house prices double every 10 years and incomes go nowhere, you're going to have a whole lot of other problems to worry about.

He's perhaps overly accustomed to government and central bank support for inflating house prices and unaccustomed to any other eventuality.

Wow, that reads like a parody article written by someone wanting to mock Ashley Church for pushing wild theories on why the housing market only ever goes up. But its actually written by Ashley Church.

Held up action going through.
Real illustration if market from mid July
Falls in sales from mid July but will not show on REINZ til August published figs for July
Expect sales 25% below 2019 for rest of year
June may well be level to 2019 simply because so few got done in April and May

Mike
I note you often refer to the "number" of sales in your comments.
Can you please clarify what you refer to here - is it the "price" or the "number of sales"?
For 99% of the population the number of sales is pretty irrelevant - rather, the price is the more important measure. Other than the state of the market, there can be fluctuations in the number of sales in any one month due to non-market factors such as holiday periods (e.g. Easter) or even weather. You might even also want to note that the number of selling days affecting the number of sales in the month every 2nd month varies by 3% compared to the previous month!!!!
For the other 1% - the number of sales is really only important as they are REA.
If you do consider the number of sales important - please tell me how you differentiate between a bull market when all are scrambling to buy (rising prices) so lots of sales, and a tanking one in which everyone is scrambling to sell (falling prices) so lots of sales???

Falling sales important because shows market declining with recession. Sales keep falling year on year in Auckland since 2005 despite pop increase and lower rates. Not just important to REAA it is vital to those who cannot afford to buy.

It certainly looks like expectations of the death of the Auckland property market were exaggerated.

Zachary
That is a big and brave admission from one who expressed grave concerns. Cheers :)
Personally i don’t think that we have necessarily seen the worst of it. There is no script as to what is going to happen based on past experience especially borders to be closed or effectively restricted for possibly as long as two years.
I am keeping options open as I have no pressure re housing. And, I am not one who claims property always goes up - I have owned property long enough to have experienced three or four declines - the GFC just being the last.

Well worth a watch is the following video on the coming housing market crash, pure logic really. Sure its out of the USA but all just a parallel to New Zealand.
https://www.youtube.com/watch?v=HEI3GIU5m3s

As per tube person we are at stage 6.

Interesting.

"Perhaps surprisingly given current economic uncertainties, Barfoot's auction activity is continuing to run well ahead of where it was at this time last year ... last year (17-23 June 2019) Barfoots marketed 71 properties for sale by auction and sold 28 of them, giving an overall sales rate of 39%."

Thanks for the info Greg Niness I don't know if you have to prepare and keep the data yourself or if B and T do that but its much appreciated to know what's the vibe.

When most respectable economists are predicting the biggest depression in living memory, One Roof and the real estate industry (the only things keeping NZME financial) are banging on as if it's business as usual. Good luck to anyone who is foolish enough to believe that real estate can never drop, or that New Zealand can continue to pretend to be a first world country.

Correction: Recession, 2 consecutive quarters of negative GDP growth which finishes today being 30 june the last day of the second quarter. The September quarter commencing 1st July will be a quarter strong economic growth 5 percent plus annualised . You are entitled to your opinions and good luck to you

Good laugh. Not up 5% compared to same quarter in 2019 I take it? Basis for comparison rather important

These up and down results can be explained in one simple term, and that is "rigor mortis"

Only 35 comments as house sales were good, if next week news comes in that houses are not selling well, there will be well over 100 comments…..

The real estate market wasn't normal before the lockdown, if anything is starting to get there just now. Looking at the actual sale prices which the article omits since it focuses in sale rates there are as many sales below and above the rating valuations from three years ago.

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