No slow down in residential auction activity as election draws closer

Property

Residential auction activity remains strong with 73% sales rate in the first two weeks of September

18th Sep 20, 9:51am by Greg Ninness

The strong level of residential auction activity that was evident at the end of August has continued in the first two weeks of September.

Interest.co.nz monitored 205 residential auctions around the country in the first week of spring (August 31 - September 6), with sales achieved on 153 of those, giving an overall sales rate of 75%.

While the number of properties being offered was slightly down on the 224 properties auctioned the previous week (24-30 August), the sales rate was exactly the same at 75%.

In the second week of September (7-13 September) the number of properties auctioned lifted to 222 and the sales rate dipped slightly to 72%.

That meant that over the first two weeks of September the total number of properties offered at auctions monitored by interest.co.nz was 427, compared to 299 in the comparable two week period (2-15 September) of last year.

The overall sales rate for the first two weeks of September this year was 73%, compared with 53% for the comparable two weeks of last year.

So there is significantly more auction activity this year and more properties are being sold, both in total and as a percentage of what is being offered.

Prices also appear generally firmer.

Where interest.co.nz was able to match up selling prices with a property's rating valuation, 86% of the selling prices in the first two weeks of this year were above their rating valuations, while over the comparable two weeks of last year just half (52%) of selling prices were above their rating valuations.

Considering we are now just one month from a General Election and economic uncertainties abound, the latest auction figures suggest the residential property market remains remarkably resilient.

You can check out the details of the individual properties offered and the results achieved at the auctions monitored by interest.co.nz on our Residential Auction Results page.

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65 Comments

by MadMax | 18th Sep 20, 9:58am 1600379910

Indeed, remarkably resilient

by tothepoint - d… | 18th Sep 20, 11:26am 1600385163

The housing market always surges forward under Labour governments......

So what's happening to house prices isn't too surprising.

Plus, NZers increasingly like the status gleaned from property ownership. The larger one's portfolio of rentals, the more impressive. (-:

Goodness me......

TTP

by Greg Ninness | 18th Sep 20, 11:31am 1600385493

Prices didn't do too badly under National either TTP. If I recall correctly, the last big boom in Auckland finished in late 2016, at the tail end of the last National Government's tenure...

by tothepoint - d… | 18th Sep 20, 11:55am 1600386940

Correct Greg - the last big boom ended around Oct/Nov 2016.

But, historically, Labour governments have been associated with upward movement in house prices, because they've been very accomplished at pumping money into the economy - more so than National governments.......

The current Labour government seems to be no exception: government expenditure hasn't been too modest under Jacinda and Grant......

Cheers for the weekend.

TTP

by Greg Ninness | 18th Sep 20, 1:14pm 1600391657

Between August 2011 and August 2014 (under National) Auckland's median house price increased by 36%. Between August 2014 and August 2017, also under National, it increased by 48%. Between August 2017 and August 2020 (Labour) it increased by 13%. However there is a lag between what happened in Auckland and what happened in the rest of the country, with the strong lift in prices that occurred in Auckland in 2014 to 2017, occurring in 2017 - 2020 outside of Auckland. That shows up in the national median price, which increased by 18% between 2011 and 2014., 21% 2014 and 2017 and 27% in 2017 - 2020. So while you could argue that house price growth has been greater under Labour than National, I'd be cautious about making sweeping statements to that effect.

by tothepoint - d… | 18th Sep 20, 1:44pm 1600393489

In both the Kirk/Rowling Labour Government (1972-1975) and the Lange/Palmer/Moore Labour Government (1984-1990), house price increases were particularly marked.

During the Second Labour Government (1957-1960) it appears that increases were more muted.

I'd be comfortable enough with saying house prices typically move up significantly under Labour governments.

TTP

by Greg Ninness | 18th Sep 20, 1:44pm 1600393493

I'd ask you for the figures but I don't see what relevence it has to the current market.

by tothepoint - d… | 18th Sep 20, 2:05pm 1600394737

Agree, Greg - it's of more relevance to economic historians.

But I take your earlier point: caution is recommended with comparisons over time (not least because of the mix/complexity of factors involved).

The dept of property management/valuation at Massey's business school used to look at this stuff. Not sure if it still does??

TTP

by mikekirk29 | 18th Sep 20, 3:01pm 1600398094

It ended because Chinese money flows juddered to halt for 6 months

by Shoreman | 18th Sep 20, 11:47am 1600386476

TTP - Here's an interesting article that clearly supports your statement that house prices increase more under Labour Governments !
https://www.stuff.co.nz/business/property/98475352/labour-governments-h…

by b21 | 19th Sep 20, 3:51pm 1600487517

The current bubble was created by the National government, do not forget that. What Labour just did was nothing, at all.

by Fritz | 18th Sep 20, 2:07pm 1600394877

You are spouting a load of garbage.

by Chairman Moa | 18th Sep 20, 10:05am 1600380355

The same clown at Westpac predicted Brisbane will have 20% increase.. Well I am going to be rich(er)
https://www.savings.com.au/home-loans/westpac-house-prices-to-rebound-b….

by tothepoint - d… | 18th Sep 20, 11:33am 1600385581

Speaking of clowns, Chairman Motor Moa, how about your prediction earlier this year that the housing market was about to take a dive?

Or, are you now going to deny what you said here just a few months ago?

TTP

by Chairman Moa | 18th Sep 20, 11:57am 1600387023

Time To Pee
still got 3 months of 2020.. talking of which, you posted same prediction of house price going to be flat and even a slight dip!
Dementia kicked in a bit early for you?

by tothepoint - d… | 18th Sep 20, 12:40pm 1600389610

In fact, Chairman Motor Moa, I stated here several times earlier this year that readers (most notably the DGM) would be surprised by the strength and speed of the recovery. (I know of nobody else who made any similar comment.)

And that's exactly what has transpired. Nowhere did I suggest that house prices would show a major fall. (It's you that said that, although you now refuse to admit it - zero accountability as usual.)

Nonetheless, I continue to believe that house prices could go"flat" and perhaps show a "slight dip" - as you put it. To be specific, as I've said here several times before, I think it's possible that prices could fall by somewhere around 10 per cent over the next 2-3 years. Anyway, we will see.

With all due respect, Chairman Motor Moa, if you're going to enter the discussion here, please get your facts straight. (Just yesterday, you said fines were a component of GDP and you had to be corrected on that alarming error.)

TTP

by Chairman Moa | 18th Sep 20, 12:43pm 1600389823

'With all due respect, Chairman Motor Moa"... you had me at "Motor"..
Respect, my ar$e, what a hypocrite!

by b21 | 19th Sep 20, 3:45pm 1600487129

It has been just postponed by the RBNZ with their kick-the-can-even-further policies but do not hesitate this is where we are headed to.

by RickStrauss | 18th Sep 20, 10:30am 1600381800

Thanks for the wealth redistribution, Reserve Bank of NZ! Great to have a centrally supported industry!

by Tillers | 18th Sep 20, 10:42am 1600382522

This COVID period has taught me that the only way for property in NZ is up! If a few 100 people lose their job then they are pakaru. If a few 1000 lose their jobs then the RBNZ and govt will bail them out. Any sign of a fall in house prices as treasury predicts the govt will engage in massive stimulus- first home buyer grants, continuation of deferrals, potential to take over non performing bank loans to avoid mortgagee sales. It’s changed my thinking from
Being conservative and holding off buying another IP to leveraging up large!

by Spectators | 18th Sep 20, 3:24pm 1600399447

Exactly Tillers. Three main drivers: 1) Historically low interest rates; 2) Tax free gains on property; 3) Lack of supply of housing. The government largely controls 2 & 3. Lets be honest they also pressure RBNZ so can control 1 too. Previous govt's controlled by both parties and the current one won't do what's necessary in relating to these three things because they don't have the balls politically. So leverage up, stuff those who can't, and hope you can get out before the bubble bursts.

by polygonalvector | 18th Sep 20, 10:59am 1600383587

I'm more and more convinced that it's again overseas money causing the current price increases.

Anecdotal of course but a recent (as in a few days ago) lifestyle property tender in Wellington - RV $1.6m - received 15 offers above that - 3 above $2m and sold for $2.3m and change. My man in the know tells me it was purchased by a trust and the new owners are overseas.

Reading between the lines from her comments earlier in the week I believe Heather du Plessis-Allan was in the running and expressed disbelief at the eventual price.

Firmly believe that there's a massive amount of money coming in from foreign buyers buying either via trust or companies setup expressly for the purpose to bypass the foreign buyer's ban.

Certainly there's an uplift in first home buyers and investors domestically too - but at the upper end - it's foreign money looking for somewhere to live, not actual people.

by Greg Ninness | 18th Sep 20, 11:24am 1600385056

Hi Polygonalvector, your comment on overseas buyers is interesting. But you should be aware that restrictions on overseas buyers apply to companies and trusts as well as to individuals. It's just that sales to companies or trusts aren't included in Stats NZ's reporting of overseas sales.

by polygonalvector | 18th Sep 20, 11:32am 1600385537

I'm no lawyer (so if there is one reading this please chip in with your knowledge!), but I'd expect that it doesn't need 100% of the trustees, or Company directors/owners to be NZ resident or an NZ citizen to purchase property. So a single resident or citizen can set up a trust including overseas citizens and simply purchase through that trust - which I expect is exactly what is happening.

Hell, some enterprising estate agents may well be offering such as a service...

Post purchase, that person is simply removed as a trustee... very much doubt that there's anyone looking after the fact. And when/if it comes to resale - I don't think there's any restriction on that.

So yeah, the restrictions may well apply, but I'd suggest they are far less stringent - and are certainly more difficult to manage.

by Mrs The Point | 18th Sep 20, 11:46am 1600386400

No, if beneficiary of the trust is foreign, then they cannot purchase property.

by Fritz | 18th Sep 20, 2:17pm 1600395463

How easy or hard is it for overseas individuals to funnel money through to family or friends here in NZ to buy property on their behalf? With ownership under the local person's name, but some side arrangement or contract protecting the overseas party's interests.

by Greg Ninness | 18th Sep 20, 2:50pm 1600397407

Hi Fritz, recent history would suggest money flowing out of China in particular had a major impact on our housing market prior to October 2016. As you suggest, this was often chanelled through friends, family or business contacts in this country. However it would appear that controls the Chinese government put in place on capital outflows had a more dramatic impact on this trade than NZ's foreign buyer restrictions, although the Chinese government had several cracks at it before they got it to really bite.

by Fritz | 18th Sep 20, 3:24pm 1600399446

Thanks Greg. To what extent can China prevent money coming out of Hong Kong?

by Mrs The Point | 18th Sep 20, 5:42pm 1600407759

They don't have to. It is difficult to get your money from mainland bank to HK bank. Plenty of documentation and running around to prove it is legit is needed. It is possible though.

by Fritz | 18th Sep 20, 5:53pm 1600408400

I meant direct from people in HK to NZ. With no transfer from China to HK.

by Mrs The Point | 18th Sep 20, 5:56pm 1600408607

That is not a problem, yet. But a much smaller pool of people.

by karl seastrand | 21st Sep 20, 10:06pm 1600682816

Greg Ninness... foreign buyer restrictions preventing you buying. No worries. Just get one of those NZ residency things. I mean we do give away about 100 000 of them every single year. Go grab one then buy up large .Ezy peezy.

by nz-it-worker | 18th Sep 20, 3:26pm 1600399601

But agents are anticipating an upswing in interest from Chinese buyers as the new lunar year begins, with many buying property through family members living in New Zealand.

"Many have family here in New Zealand and they often buy property through them. The hardest part is not in fact the legislation, but getting their money out of China." - Peter Thompson, Barfoot & Thompson.

real-estate-agents-target-chinese-new-year-buyer-boom

by Te Kooti | 18th Sep 20, 11:32am 1600385577

An Ohope beachfront sale for $3.65m - that's all you need to know.

by J.C. | 18th Sep 20, 12:12pm 1600387940

An Ohope beachfront sale for $3.65m - that's all you need to know.

Sounds like something picked from the daily round-up over at Granny Herald. The media has doubled down on the new 'property boom', which is understandable considering they rely on the revenue from the property sector. Without it, sources like Granny would unliklely be a going concern.

by Te Kooti | 18th Sep 20, 12:15pm 1600388159

It doesn't matter where it's from if it's true. All surrounding houses will get bench-marked to that sale.

by J.C. | 18th Sep 20, 12:42pm 1600389732

Sounds like a bit of the ol' "we's rich" approach to valuation.

by Apex Andy | 18th Sep 20, 12:16pm 1600388177

Probably a new mongrel mob gang house. They have to wash that money somehow.

by J.C. | 18th Sep 20, 12:46pm 1600390000

Quite a bit of P money needs cleaning. What would we do without the meth trade? Hugely underestimated economy I suspect. P money can go into houses through delegated professionals and a few mouths get a bite of the cherry.

by Te Kooti | 18th Sep 20, 12:59pm 1600390747

Meth is a huge problem, quite lucrative by all accounts though.

by tothepoint - d… | 18th Sep 20, 1:07pm 1600391277

Indeed, the joys of substance "P" are very short-lived.......

TTP

by Fritz | 18th Sep 20, 2:12pm 1600395137

Nz has a massive P (p for property) addiction

by Pragmatist | 18th Sep 20, 3:59pm 1600401563

Withdrawl is going to be harsh for some.

by printer8 | 18th Sep 20, 4:04pm 1600401863

Apex and CJ
You really are desperate or have a love of conspiracy theories.
The same legislation that is directed at FB is also intended to curb money laundering. The provisions of the Act has multi-layered requirements on banks, REA and lawyers regarding source of funds and ownership under threat of severe consequences of substantial fines and/or loss of licence.
Drug money laundering will more than likely create a red flag by one of these. The recent increase in raids and seizing of property and goods is related to this legislation rather than police initiatives.
I challenge you to name a respected commentator who includes drug money as a current driver of the house market.

by b21 | 19th Sep 20, 3:46pm 1600487183

Some idiot made a very poor decision, so what?

by Zachary Smith | 20th Sep 20, 12:09pm 1600560586

I took note of comments like yours and it cost me 200k. No one knows the future.I have always been wrong about the imminent demise of house prices when I have called it.

by stuart786786 | 18th Sep 20, 3:00pm 1600398024

Housing market is getting too hot. Houses in Pakuranga going 40% above CV is crazy but happening.

Many FHB are stretching beyond because of FOMO. Should realise that low interest rate has been offset by high house prise but FOMO emotion too is running high now.

by Spectators | 18th Sep 20, 3:43pm 1600400623

Indeed. The sad reality for some of those FHBs is that they probably can't wait until this overvalued property market corrects and so reluctantly leverage up to pay over odds for a lower quartile property. The real question is why are they having to bid up so much? Other FHBs driving the price up? Looking at the bank lending data one would suggest it's 'Ma and Pa' and the Elderly buying an investment property to secure passive/retirement income given low deposit rates. Can't blame the Elderly and for 'Ma and Pa' it all comes back to the tax incentives of property speculation. The fix requires a NZ government to do something about it which Labour has just proven is too much for NZ voting public to handle. It's all sad really.

by mikekirk29 | 18th Sep 20, 3:04pm 1600398265

No one asks if it’s sustainable and when it will drop away. apparently NZ QE as a % of GDP highest in world

by karl seastrand | 21st Sep 20, 9:57pm 1600682258

mikekirk29.... highest by a long shot

by iconoclast | 18th Sep 20, 4:24pm 1600403060

Among the 86% selling above July 2017 Valuation (Last week was 2018 now back at 2017)
Most were moderate
Some were just above 2017 RV
There are some standouts

A trawl through the sales reveals a number were sold below July 2017 valuation

by Fritz | 18th Sep 20, 4:14pm 1600402463

Glad I bought last November, especially with low and falling interest rates.
But as a recent Fhb, I really empathize with Fhbs. It's a debacle.

by Just a farmer | 19th Sep 20, 9:57am 1600466254

Same here, I almost pulled the plug on it as well with Covid approaching. Glad I didn’t though, potentially looking at quite healthy capital gains in my first year as a home owner now.
Not that it makes much difference as if I sold this house I would also need to buy another at inflated prices, but it gives us a nice boost to our LVR and the bank is happy.

by Fritz | 18th Sep 20, 4:44pm 1600404248

Wow, I just heard a landlord from ChCh on Radio NZ having a right old whinge around tenancy laws. I nearly cried.
I thought it might have been The Man, but the guy moaned about how there hadn't been any capital gain in the last 10 years to offset greater costs. The Man was always talking up the capital gain in ChCh, so couldn't have been him!!

by al123 | 18th Sep 20, 5:11pm 1600405913

Greater costs like the 5 percent DROP in mortgage interest rates over the last 10 years?

by iconoclast | 18th Sep 20, 5:48pm 1600408126

Anyone know of any landlord that has passed on interest cost reductions by way of rent reductions

by Fritz | 18th Sep 20, 5:54pm 1600408472

Good point. Dome landlords with mortgages will have large reductions in mortgage payments

by al123 | 18th Sep 20, 6:10pm 1600409420

Exactly - which is why it always annoys me when landlords continually claim they'll have to increase rent because of extra costs. If they don't also decrease rent when costs decrease, its clear that rent is a function not of what their actual costs are, but what they think they can charge and still have tenants. At least they could be honest about that.

by Fritz | 18th Sep 20, 6:13pm 1600409618

The clown on Radio NZ was a shocker. It was quite funny

by This Charming Man | 18th Sep 20, 8:53pm 1600419187

Question. Is the method of sale partially to blame for the increase in house prices over the past decade? Twenty years ago few properties were sold by auction and house prices were somewhat reasonable. Nowadays auctions are commonplace providing greater competition between prospective buyers. If auctions were removed as a method of sale, leaving houses to be sold by deadline / negotiation / tender, would that go some way to slowing the increase in house prices?

by Carlos67 | 18th Sep 20, 9:19pm 1600420767

Well attended the Tauranga Auctions yesterday and although good quality homes were selling at the right price, I would not say the market is "Strong". Strong to me would be everything at least attracted some form of interest but this is not the case. The property market is still being pumped but if it doesn't start going down before the mortgage holiday ends then its not going down. Expect the holiday to be extended. While the free money continues to flow the party will continue.

by b21 | 19th Sep 20, 3:49pm 1600487394

I have the same feeling to, all these news propagated by the media are just choosing a side of the story, auctions are a small proportion of the market anyway yet seems it is all that matters these days since they are "buoyant" and make the market "resilient", what a joke!

by Crazy Horse | 18th Sep 20, 10:35pm 1600425313

Right now, not just the Auckland property market, but New Zealand's reminds me of the words of this old song ......."Fly me to the moon, Let me play among the stars. Let me see what spring is like, On a, Jupiter and Mars" .....that's how high the prices seem to be going anyway, but how will it all "play" out - that is the real question ?

The only way out for recent buyers is rampant inflation or "inflate the debt away" .....but I can't see that as being a great thing for any economy anyway .....as eventually everything else will go up as well....except for, you guessed it - wages and salaries.

by Bret Glazer | 21st Sep 20, 7:40pm 1600674036

As a central Auckland agent our experience is activity from buyers is UP! money is looking for a home, however it seems vendors are keen to sit on the fence, my advise is not to wait to enter the market.....the buyers aren't!

by karl seastrand | 21st Sep 20, 9:54pm 1600682085

Imagine if there were about, let's just say 80K, fewer people living in God zone every year. Might solve one or two issues, especially those related to the property market.