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Even though Level 3 lockdown affected auctions in Auckland, overall activity was still up by two thirds compared to last year

Even though Level 3 lockdown affected auctions in Auckland, overall activity was still up by two thirds compared to last year

Residential auction activity took a dip downwards in the week from 17-23 August, although it remained considerably more buoyant than it was at the same time last year.

Interest.co.nz monitored 234 residential auctions over the week from 17-23 August, compared to 275 the previous week (10-16 August).

The decline in auction activity was entirely restricted to Auckland, with activity in other regions remaining at previous levels, suggesting the overall decline in the number of auctioned properties was due to the disruptions caused by the Level 3 lockdown in Auckland.

However even though activity in Auckland may have been crimped by the lockdown, the total number of properties offered at the auctions monitored by interest.co.nz was up by two thirds compared to the corresponding week of last year, with just 141 auctions monitored in the week of 19-25 August last year.

And the sales rate remained very buoyant, with sales achieved on 159 of the properties offered over 17-23 August, giving a sales rate of 68%, which was almost unchanged from the 66% sales rate the previous week, and well up on the 57% sales rate in the equivalent week of last year.

But perhaps the biggest difference in the market now and the market a year ago is in the firmness of prices.

Where interest.co.nz was able to match a property's selling price with its rating valuation, 84% of the selling prices in the week of 17-23 August were above their corresponding rating valuation.

In the corresponding week of last year, just 54% selling prices were above their rating valuations.

The individual details of all of the properties offered at the auctions monitored by interest.co.nz and the results achieved, are available on our Residential Auction Results page.

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74 Comments

20
up

Adrian Orr is fast becoming the most divisive figure in NZ. His picture is on the dartboards of the poor and replaces the queens portrait above the giant marble fireplaces of the rich. Why has he decided to destroy so many lives?

Hi FB
You had a change of mind? You were claiming anyone buying a house was "stoopied". Feeling that you might have now missed the bus?
However don't fret, just wait . . . listen to your like-minded friends as that bubble burst is coming. :)
Cheers mate.

24
up

Hi P8, The inevitable crash will come, even George Orr-well can't stop it with his dystopian plan for the NZ poor. His ammunition is running out. When he gets to -0.75 he has had it. I just wish he would have some pride and accept reality now. Cheers : )

Hi FB
Then you have absolutely nothing to be upset about.
Cheers :)

21
up

Just because something will be better in the future does not mean that you should not be upset about somebody trying destroy your present : )

Maybe he’s concerned not only about himself like some on this site?

Orr, and the RBNZ, have responded to Covid in much the same manner as most other central banks. In fact, they are yet to expand QE to Corporate debt like the Fed, or even ETF's like the BoJ. Your personal attacks on him are infantile and mark you as bitter losers. You forecast house prices to fall and it hasn't eventuated. You took a risk and got it wrong, so stop moaning, sack-up and be thankful you live in a first world country.

Doing the same as other does not mean you are doing the right thing and in this case is quite the opposite.

Agree he should not receive personal attacks, however he is in charge of an non-democratic organization which decisions are damaging this country just in an attempt of postponing the inevitable who knows why, he is making those decisions which you would assume he agrees with, otherwise he could just quit.

“In fact, they are yet to expand QE to Corporate debt like the Fed, or even ETF's like the BoJ” Are you making this statement as a positive or a negative towards Adrian Orr?. If QE is bad why do you criticise others for criticising it as policy. If it is good why do you use his limitation off it, in his defence. This is a question of relativity.

I'm clearly not criticising it - the point is there is a lot more QE options available to stimulate the economy should it need it. The RBNZ have not got close to the level of stimulus of the Fed, BoJ, BoE or ECB. If you do not understand why a small, open, export orientated economy is somewhat hostage to the monetary policy of it's trading partners, I would suggest that perhaps it's not a topic you should be dishing out criticism on.

Hi printer8 I know you are a bit of a joker but please tell us how this housing bubble is going to keep growing, anyone can see this housing bubble has been pumped to far and the bigger it gets the larger the fall.

Hi DTRH
In the short term I see likelihood of some upside while QE and low OCR in place - cash is going to be abundant and returns for cash low so assets are going to be in demand as has been witnessed over the past decade.
I see the possibility of some downside in the short term - say over the next year but I don’t see that as being major. I think that bank economists revising their estimates from 10% down to 3 to 5% (and that seems to be the new current consensus) is likely and without their modelling tools and data I am happy to accept that. Importantly for FHB, this outlook is within the range of buying well and buying poorly so market considerations should be given no more weight than considering what is a reasonable or fair price for a house on the current market.
As to the longer term, over the past decade (more so than I am aware of over the past forty years) RBNZ has demonstrated that it is prepared to influence property prices - such as LVRs - for economic stability reasons. For this reason, in the longer term I see them continuing to want to influence the market for the same reasons to the extent that they can. I see claims of bubble burst as flying into the wind, whereas expectations of accepting some RBNZ moderating strategies albeit with some fall more to be flying with the wind; call me what you want but I have always found flying with the wind the better choice.
So in the longer to medium term, given there is still uncertainty as to the extent and length of Covid and its the effects on NZ and global economies there may well be some downside, I am expecting we may well see markets relatively flat for sometime in the post-Covid economy recovery period prices and affordability become more aligned - I feel that it will be a long term recovery and a stable housing market rather than volatility will be the new norm.
Given all of this; as for FHB, there is always uncertainty; however one’s first house is a home and is not purely about economics and they need to clearly think about the other factors involved while remaining prudent.
I feel strongly about the NZ cultural expectation of homeownership and I wish FHB well. Yes, it’s difficult times, but then like Richie McCaw you accept what the conditions are and look at strategies to adapt to that - however, simply moaning is not effective.

Very well explained, but at the moment house prices are at the very top of affordability for a couple on average wages even if you had no debt and a large deposit stashed away. The whole world is struggling at the moment it would not take much for inflation to take off this would cause the government to raise interest rates or the dollar would be devalued lots of people would be in financial pain whichever path the government went.

You had a change of mind? You were claiming anyone buying a house was "stoopied". Feeling that you might have now missed the bus?

Wow, printer8. That reads a bit smug and petulant there. Perhaps spare a thought for the young people just coming out of high-school or university whose misfortune of birth you are also unavoidably poking your tongue at?

Misguided scapegoating. Focusing on the demand side of the equation is never a recipe for success when it comes to land, with the possible exception of reducing immigration. If we build one house for every man, woman and child in this country I guarantee prices will fall.

Alas, that is just a letter to Granny, not Granny herself.

That's utter rubbish, Foreign buyer. Shame on you!

Adrian is one of NZ's best economics brains - plus a damned good manager and decent kiwi bloke.

Spent his early career at highly regarded think-tank NZ Institute of Economic Research (NZIER) where he was seen as immensely talented and someone who would go places fast. And indeed he did, taking leading roles in the trading bank sector and on to Deputy Governor of RBNZ. Then he became CEO at the Guardians of the New Zealand Superannuation Fund which is one of the most prestigious jobs in our public sector - and the highest paid. Deservedly, he became Governor of the Reserve Bank a couple of years ago.

NZ is extremely lucky to have Adrian Orr - he could be overseas earning an immense salary.

TTP

18
up

.... so he's a mason then?

21
up

Yeah, yeah just keep feeding the ponzi scheme and ignore economic reality.

CJ099 & Foreign buyer:

Those are trite comments that show that you're not interested in constructive dialogue.

TTP

14
up

TTP, you just listed Adrian Orr's positions he has attained as the reason why somebody is competant for the job. I have had plenty of bosses with connections who got there because of who they know. By your reasoning surely the president of the United States of America is an amazing mind above all others?

Foreign buyer:

That's another trite comment.

TTP

TTP, you really only show up in the property threads aye. Don't you have an opinion on anything else going on financially?

11
up

His raison d'tre for being on this site is to pump the housing market as his business depends on it.

Don't waste your breath FB, the lobby doesn't rest not even on the weekend.

TTP, some of the ppl you call DGM, aren't actually DGM purists (who can provide a great perspective), they could be WI (willfully/woefully ignorant)
(WI is pronounced wee, rather than why)

10
up

Adrian Orr is the personification of a mathematical equation designed to embed wealth inequality. No wonder he’s your poster boy TTP.

Haha, NZIER is a right wing think tank, nothing more.

I think adrian should be on the same asset register as MPs,on his mega salary and fund management skills I would expect him to be worth millions,but would be disappointed if he had a highly leveraged property portfolio when he is driving interest rates down.

15
up

I doubt it. Most poor people will either be too busy or won't be sharp enough to realize that Orr is orchestrating a massive wealth transfer to asset owners.
He's obviously picked the side he's going to support (asset owners) and chosen to hell with the consequences on others.

It’s a giant game of “follow my leader” the leader in this case JPowell at the Federal reserve.

Furthermore, he has control of most relevant economic policies right now while nobody has voted for him.

His decisions now will affect millions in the years to come yet he has no legitimacy to do so.

The poor would not know who Adrian Orr is let alone have his picture on his dartboard.

18
up

I don't blame Orr at all. He's just following his mandate. That mandate needs to be changed by the government. But it won't because we are led by a conservative populist.

Yeah, this current government has ended up being a case of the saying "Meet the new boss, same as the old boss".

Plutocracy
Not always the same case - HBDHB is a case in point.

Do you think he is getting his orders from the from a leftist government? In theory the RBNZ is a non-democratic independent body, however all indicates he's doing all that banks dictate just a few months after they do, so reality would indicate otherwise.

Just checked auction result for Manukau and can see how strong the housing market is where houses that have been sold in auction are way above the RV - very high.

As of now it seems that property has already jumped 10% to 20% than before lockdown instead of fall of 10% ti 20% expected by many ( including myself End of year fall between 10% to 20% was my reading. Though still not end of year but seeing how strong market is having doubts though still feel fundamentally should fall).

13
up

that's because wages are rocketing up, it's all based on fundamentals.

Wage subsidy and mortage deferral are nit fundamental.

11
up

I think he jests.

Haha, good one!

How about we wait for the latest HPI data rather than rely on anecdotal “feels”

10
up

Continuing with same tired narrative of "higher than last year" is pretty lazy thinking.
Patently, this winter is atypical for various obvious reasons that have bene covered my myself and others, ad infinitum.
Unless longer time frames and context are included, the narrative is unrepresentative and partial at best, or at worst, simply misleading.
The market is bi-furcating. The top end sales, over 1.5m, as I have endlessly repeated, are up FAR more than those below 900k. The first group of sales, compared to 2019, are up 45% in 2020. The lower brackets vary between - 15%, 5% and 7% respectively, between 500k and 900k.

Yeah Greg, your lazy thinking doesn't fit the narrative (sarc on)

Unless longer time frames and context are included, the narrative is unrepresentative and partial at best, or at worst, simply misleading.

Right. But people don't care. They need something to believe in. So if auction results for a week or whatever show most houses sold above some govt-assigned value benchmark, people either start doing online cartwheels because they believe that the bubble has moved to impregnable level while others feel that Grand Wizard Orr is casting the wrong spells.

To be honest, all bubbles end up with the mainstream engaging in dialogue with huge elements of irrationality and emotion. Our bubble has just been disturbed by probably the most unimaginable shock (except for a possibly a nuclear holocaust). It's no wonder people on a livewire considering NZ as a whole doubled down on the bubble a long time ago. Those who cannot accept the existence of a bubble are probably their own worst enemies as they have little understanding of protecting themselves. OTOH, those who could see how this potentially could unfold should be in a much better position. Now Bitcoin was one of those places to move as central banks continued their wanton destruction. It's the kind stuff you most definitely cannot bring up around the water filter without drawing suspicion to yourself. The sheeple don't like this kind of sorcery. Their faith is more likley to be captured by high priestess Bindi and Ashley 'snakeoil' Church.

The understanding of statistics and data analysis among NZers is woefully poor. This is why any media outlet can operate with free abandon. Think of it as no different to the middle ages when the peasants were in fear of the religious leaders and accepted their claims and decrees without any question. Similar situation exists today, particularly with channels such as Granny Herald. Interest dot co as well with these auction results. Oh well, at the end of the day, traffic is important in these data-driven media times.

Equity destruction would mean deflation and destruction of money.
So, house prices cannot be allowed to fall, as with share prices.
Borrowing is no longer crux for housing market in Auckland, leverage and asset inflation plus protection of wealth, are .

10
up

Agree now it is do or die to protect housing market as stakes are too high.

ANY FALL IN HOUSE PRICE WILL LEAD TO COLLAPSE OF ECONOMY which is also very evident by action of reserve bank and government. Government has been most active to protect the bubble than businesses. If businesses that are affected by coronavirus, now have to look after themeselves as cannot afford to continue stimulus forever than does not the same logic to apply for mortage - so called investors/speculators.

Eperts / Media should ask government :

IF GOVERNMENT UNDERSTAND AND OFFERING MORTAGE HOLIDAY TILL END OF MARCH (To protect housing market) THAN WHY NOT SUPPORT BUSINESSES/ AFFECTED INDUSTRY WITH WAGES SUBSIDY AND OTHER STIMULUS ALSO TILL END OF MARCH. WHY ?

ANY FALL IN HOUSE PRICE WILL LEAD TO COLLAPSE OF ECONOMY

I've been alluding to this for quite some time by harping on about the relationship between house prices and consumer spending. I'm not an 'expert', even though I ran price percpetion trackers for one of the world's largest FMCG manufacturers to directly answer questions about the wealth effect. The Reserve Bank and media don't addresss it. I even tried to bounce it off Bernard Hickey. It was out of his realm of thinking.

Asset prices can go down, it is just how a free market works, unless we are no longer in one of course.

Regarding whether price falls can be allowed, of course they can and it should be encouraged when a bubble has formed! Some ideas would be better control of land prices, lower subdivision costs or a CGT like all other countries of our environment have.

Banks create debt by fractional lending, which in turn it usually gets paid back in full, usually with the returns of labor and productive economy. Once debt gets paid off it becomes part of the bank's equity, since this money didn't exist in the first place and the bank did nothing to make that except from already having a fraction of cash reserves, what is stopping us (except from some half-baked old liberal narratives) from getting all this wealth back (with the exception of the interest), which we could use to help offsetting the negative equity asset holders might end up with?

Bubbles happen, we should just have the mechanisms in place (which we lack) so they can pay for themselves and not drag everyone with them based on the greed or the bad decisions of some.

Fantastic comment b21.

21
up

Lots of Auckland houses are empty with foreign owners having benefitted greatly from huge capital gains. These capital gains are now being protected by Orr at the absolute detriment of poor, young and future New Zealanders. What is happening is a national disgrace. The RBNZ should have accountability.

No. Grand Wizard Orr is trying to protect the 67% of h'holds who fall within one standard deviation of the mean.

Yes agreed that's why at the very least we should be taxing those off shore owners. Which would in turn provide a huge economy boost to help fund affordable housing, something that a number of Western countries are currently do and is hugely successful for them.

Lots of Auckland houses are empty with foreign owners having benefitted greatly from huge capital gains. These capital gains are now being protected by Orr at the absolute detriment of poor, young and future New Zealanders. What is happening is a national disgrace. The RBNZ should have accountability.

Yes, there is likely to be empty homes sitting around Auckland for various reasons: money laundering for foreign intetests included (btw, look at Australia. One of the world's easiest countries for filthy lucre). And it's quite possible that meth profits have been poured into Auckland houses.

But let's get real. Blaming foreigners for the bubble is reactionary nonsense. And I know this all about the perennial boogeyman: the Chinese. I know for sure that there are plenty of ratbags from China who've set up shop and NZ is another money laundering paradise for mafia money and stolen public monies from China (not that John Key or any other of the political troughers care).

You're barking up the wrong tree. The primary driver of the NZ bubble (and all of the other Anglo bubbles) is credit created from thin air. Deal with it.

You'll need to provide some evidence of this. The few empty houses I see round the place all get demolished or renovated in fairly short order.

In 2009/2010 many predicted house price crashes in NZ.
Look what actually happened - if you’d bought in 2010 you would have doubled your money.
It may be wrong, but that’s what happened.

Doubled your debt more like. You need to actually look at how the property ponzi scheme works and remember falling mortgage interest rates and foreign money can not last forever.

Interest rates have been falling since 1988.
With a few minor bumps along the way.
My mortgage in 1987 = 21%
My mortgage in 2020 = 2.55%
They still have a way to go, and for longer.

Of course house prices were going to double mortgage belt. I predicted it in 2010. Why you know why. Central Banks creating asset inflation to boost the economy. It does not take an expert to figure out.

This time the fed and the central banks are coordinating a global takeover. Bypassing the banks and govt. They will fund corporates and Wall street directly forcing commercial banks out of business once they issue central bank digital currency and Ubi.

Be very afraid of what comes next..

I’m in a unique situation where we are looking at buying a house in Auckland to live in after having sold last year and also selling one of our IPs to bring down our debt levels.

Buying between 1m - 1.2m and there just isn’t enough stock around and that’s what is leading to high clearance rates and what I think are crazy prices as people tend to panic buy. Talking to agents they are encouraging people to sell now and we will see a number of houses come on to the market in early spring with the election pushed back. I expect more stock will slow down price growth

We listed our IP for sale in July and we had 2 offers fall over due to finance. We’ve decided to pull it off the market and try again next year although agents tell me investor market is picking up again in Auckland

I work for a multinational and while my job is safe we’ve had job cuts. An export business in our building has cut half its staff and every week there is a story about job losses in the Herald. I have friends who own businesses and they are really struggling and stressed out.

Really would not enjoy trying to buy a decent house in a decent area in Auckland for between 1m - 1.2m. I'm looking in Tauranga in the same price bracket and having a bit of trouble. Much newer builds in Tauranga and the standard of houses is far higher than Auckland overall.

Kiwi Indians are buying

Agree this time is kiwi Indians specially in Auckland as are buying stand alone house to build more house.

Yeah... Indian buyers are snapping new builds in places like South Auckland, while fewer Chinese buyers are interested in central Auckland million-dollar properties.

From what I have seen quite a few times some of them get it (development) very wrong indeed.

Now really now it has been noticed thar our housing market is too BIG to Fail (Better late than never) .....Everyone knows what damage Reserve Bank and so called FHB friendly government is doing but themselves like National government (For all Labour suppprters).

https://www.newsroom.co.nz/our-housing-market-is-too-big-to-fail

but in the real world, nothing is ' too big to fail'.

Do you know what was also too big to fail? The US housing market.

Another piece of shameful lobby propaganda BTW.

The RBA knows whats coming and points the finger at greedy investors.

https://amp-news-com-au.cdn.ampproject.org/v/s/amp.news.com.au/finance/e...

RBA is protecting their own and passing the buck. Mind you, for them to acknowledge that a 'crash' is possible represents a big shift in attitude. Nevertheless, they modify the probability accordingly as to not spook the sheeple (if they are listening).

FB
You would do the Don proud. Twist the facts to suit your narrative.
The article you refer to is based on a RBA stress test. The RBNZ - while estimating a fall of 10% - similarly did stress tests up to 40% as RBA has done.
The article has an alarmist bias regarding the RBA stress test and you take that even further.
The article notes that the RBA see it as an “extreme case” albeit plausible hence it was one of a number of scenarios tested - far, far different from your claim “RBA knows what’s coming”.
If this the basis of your assertion of a bubble burst - then you are very, very desperate in trying to justify it. :)

Note: While RBNZ did the same stress tests, they specifically commented that those tests should not be reported out of context. Your article does that for the RBA test - and you take it even further. Desperation stuff mate. Cheers

Actually, the RBA considered urging the federal govt to shut down the real estate market to avoid a meagre fall of 15%. This is an indication of how worried they are. So the idea that central banks have full control of and are able to accurately forecast what the market is going to do is broken. Anyone with an interest in the history of bubbles should know that they are not omnipotent and all-knowing.

https://www.abc.net.au/news/2020-06-18/reserve-bank-considered-asking-fo....

Days to the General Election: 21
See Party Policies here. Party Lists here.