Auction rooms in overdrive as auction numbers double compared to this time last year

Property

Auction activity has already edged ahead of where it was at the peak of last summer's selling season

10th Oct 20, 6:57am by Greg Ninness

Auction room activity continues to go from strength to strength, with auction numbers overtaking those at the peak of last summer's selling season.

Interest.co.nz monitored 737 residential property auctions over the two weeks form September 21 to October 4.

That was almost double (+97%) the 374 properties offered at the auctions monitored by interest.co.nz in the equivalent two weeks of last year (September 23 to 6 October 2019).

And it also slightly ahead of of the 706 properties auctioned in the first two weeks of March, which is traditionally the peak of the summer selling season.

So it does seem as though summer has definitely arrived early for the housing market this year.

It will be interesting to see if it can maintain that momentum or starts to loose some puff as we head towards the Christmas/New Year break, but with the Reserve Bank determined to keep downward pressure on interest rates, a slow down in activity looks unlikely for the time being.

However the overall sales rate did ease slightly to 65% at the auctions from 21 September to 4 October, down from 71-72% over the previous two weeks and down even further from the 75% sales rate at the auction in the first two weeks of March this year.

That could suggest that some vendors are starting to have unrealistically high price expectations and as a result their properties are being passed in.

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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52 Comments

by Wilco | 10th Oct 20, 8:02am 1602270148

Is the increased auction activity an indicator that more houses are being sold or just that a greater proportion of houses are being sold this way?
With all the focus around auction numbers and sale percentages surely total house sales are the true indicator of market strength?
I can see for myself the market is hyped but is it frothy rather than with substance. I guess in the months after the election we will find out.

by printer8 | 10th Oct 20, 9:03am 1602273819

Wilco
The current increased auction activity is simply an indicator of the market being hyped.
With the market hyped there is currently price uncertainty and greater buyer competition, so auctions are the ideal marketing method as vendors are wanting the best price and auctions provide competition amongst buyers - so there is currently a greater proportion of houses marketed and sold this way. Auctions simply get the best result when there is buyer competition.
Currently 16% of properties nationally sell by auction (REINZ figure) which is up, however in Gisborne which has seen some of the country's most rapid increase over the past year auctions are apparently accounting for up to 50% of sales (talking with local REA).
Auctions are typically the more popular method of marketing when the market is either strongly a sellers' one, or sellers are desperate.

by stuart786786 | 10th Oct 20, 8:09am 1602270570

Wow many property that have been sold going above 30% to 40% above RV confirms that RBNZ governor has not only managed in keeping the housing market alive but has been successful in accelerating the ponzi to a level not seen before.

Also should stop saying that is doing to help FHB as properties selling for 1.2 million or even million plus are not FHB and falling interest rate has already been offseted by rising house price. So FHB is out of the picture and if not already, any few left will soon be, the way reserve bank knowingly is hell bound for doom of FHB specially in Aucckland.

So politicans and reserve bank and for that matter even so called experts should stop mentioning the word 'HELP FHB' as any FHB who are tying are borrowing in extreme to buy pigeon hole (as that is what is available in their budget in Auckland) out of FOMO and reserve bank by their statement create an extreme level of FOMO as they say more that what reserve bank do, their words are enough to create panic and that is exactly what foreign looking deputy reserve bank governor has done - may be giving his community a gateway to offload properties as may get worse despite.....

by richard1965 | 10th Oct 20, 8:15am 1602270928

Agree no article or journalist should come with a heading indicating helping FHB.

Everyone knows that nor reserve bank nor Labour government is doing anything to help FHB as rising house price from this level could never be in FHB interest /help them.

Should control speculate demand by introducing LVR as before for Investor, atleast.

by FamilyGuy | 10th Oct 20, 4:12pm 1602299550

My guess is government wants this to make landlords happy. landlords is a very strong voting bloc and Jacinda doesn't want to annoy them. FHB in general are younger and often do not vote and so it'd not hurt the government if prices go up.
Best way is vote these guys out- both national and labour. they feel entitled. they think Kiwis have no other option.
If you want to shake up things a bit- go for TOP.
FHBs, you have nothing to loose. no pun intended.

by JimboJones | 10th Oct 20, 8:39pm 1602315590

I doubt any landlords voting labour

by frazz | 11th Oct 20, 8:59am 1602359940

You mean slumlords?

by Quidgybo | 11th Oct 20, 12:08am 1602328120

Isn't it more that NZ's GDP and inflation targets are primarily drivin by house price inflation? From what I can see the RBNZ is saying they will with govt backing, do ANYTHING to stop house prices leveling off, nevermind drop. I reckon we're on track for interest rates of 1.5% by end of 2021, then they will start to devalue the NZD so your house price dollars continue to grow while the 'value' doesn't. I'm a fhb in the market, its very hard to know what to do. Can't keep putting life on hold for the crash.

by B727 | 12th Oct 20, 11:01pm 1602496916

Untrue. I am a FHB who purchased in that range last year after returning from overseas. Plenty of my friends are in the same boat and continue to be so as they return with sizable deposits to well paid jobs. The last point surprised me a great deal.

by DIYman | 10th Oct 20, 8:10am 1602270647

Retirement village companies reporting a lot of sales, indicates supply of freed up housing stock is fueling the supply side of the equation, and low interest rates is fueling the demand side, leading to a predictable outcome.

by bw | 10th Oct 20, 8:37am 1602272224

Demographics + Central Bank/Government failure =

Actions have consequences, and after 30 years of waste, fraud and corruption being normalized while the purchasing power of labour decayed, the consequences can no longer be delayed by 'doing more' of what's hollowed out the economy and society in the first place.

(CH Smith)
Lies, Deceit and Corruption, even here....and it has consequences. "Second property owned by wealthy Chinese man burns in same week"

Edward Gong, was arrested ..... and charged with fraud and money laundering ...a High Court judge granted freezing orders over Gong's assets in New Zealand, which include $69.5m held in bank accounts and an Auckland home worth $2m. New Zealand detectives alleged...
the money laundering was committed here in order to distance Gong from the alleged pyramid scheme in China

https://tinyurl.com/y57jpgxx

by JimboJones | 11th Oct 20, 8:35am 1602358537

Not many of the commentators predicted the outcome...

by Luke83 | 10th Oct 20, 8:18am 1602271100

Be interesting to see what it looks like next March/April

by Zachary Smith | 10th Oct 20, 8:37am 1602272265

Central Auckland brick and tile units seem to be doing exceptionally well. This one in Greenlane sold last week:

https://www.barfoot.co.nz/property/residential/auckland-city/greenlane/…

1.310M. In 2010 it sold for 485k which is a 170% gain in just over ten years. Not much done to it during that time either. That's going up by $6500 a month, every month for over ten years while salaries hardly changed. It is kind of strange.

Is it directly related to interest rates and rental return? 485k at 7% is a similar cost to 1.310M at 2.5% at around 34k a year. Meanwhile the rental return has probably gone up at least 50% in that time making todays enormous price a seemingly better deal.

by JimboJones | 10th Oct 20, 8:41pm 1602315718

Yep despite talks of bubbles and taxes etc, the real cause is low interest rates.

by VeryInterested | 12th Oct 20, 8:07am 1602443252

The real cause is US. People going out and spending ever increasing amounts of money on housing because they believe prices don’t go down and they double every 7 years. Can’t blame governments, banks etc any more. WE ARE DOING THIS TO OURSELVES!

by taimaiakka0 | 10th Oct 20, 8:43am 1602272636

More houses comming to market can also be that many fear or worry that good time may not last long so sell now befire all the stimulus ends.

This buzz /FOMO that we hear now is created by RBNZ by their statement on wednesday and could be because they may not be saying much in public but more worried about what is to come, once mortage holiday ends and that is the reason preparing for salvaging.

Extreme action by reserve banks are indicator of how bad the situation we are in today and not sign of prosperity though so far have managed to inflate stock and house price by Monetary and fiscal measures - not to forget unlimited printing if money.

by Zachary Smith | 10th Oct 20, 8:42am 1602272522

I'm sorry taimaiakka0 but it is hard to take predictions of doom seriously now.

by bw | 10th Oct 20, 8:48am 1602272882

Does it depend on what one sees as Doom?
The RBNZ told us yesterday what it sees as Doom - Property prices falling. But we have to ask ourselves, "Why did they even bother to publicise that if it wasn't on the cards?". It must be, or why come out with a statement like that? Was it supposed to reassure us all that Doom wasn't coming, because they won't let it? Or should we not all see that Doom is what they have been and are doing to the economy? Yes, is the answer to the last question otherwise, why are we here?

by Zachary Smith | 10th Oct 20, 9:05am 1602273959

Could be bw but why was a property price fall so terrible? At the beginning of the first lockdown if someone had a crystal ball and looked into the future and saw that property prices would drop by only 10-15% we would have all thought that was reasonable, even "dodged a bullet" maybe. We were ready for it, some were looking forward to it, hoping to pick up a bargain or two. Most of us had braced for the impact and were ready to face things.

Maybe I'm just looking at this from my own perspective.

by taimaiakka0 | 10th Oct 20, 8:56am 1602273418

Agree ZS that it is hard to predict and also the dedication that RBNZ has to support and promote rising house price, chances are little of any fall as by their talk RBNZ has made it clear that will go to any extreme as now even they are admitting that only real economy in NZ = Housing but just like life cycle - no one wants to age and die or Kings and ultra rich would live forever but do despite all money though may extend by going on ventilator but ultimately... Similarly economy cycle has to run its course though may delay by extreme measures but fact is that are distorting the fundamental for very very short term gains.

How long can NZ economy run or even sustain on housing ponzi is to be seen.

by JimboJones | 11th Oct 20, 8:42am 1602358944

“it is hard to take predictions of doom seriously now” - might be a good indicator that doom and gloom is on the way - it always happens when the general public are least expecting it.

by Zachary Smith | 10th Oct 20, 9:09am 1602274164

Should the RBNZ try to predict what is going to happen and act proactively or wait and see and apply stimulus when it is seen to be required? The latter would seem to be the sensible approach.

It is as if the RBNZ and the government cannot bear the thought of house and business owners incurring losses., even paper losses, or that anyone should lose jobs, or that old people should die. As far as possible no one must suffer at any time for any reason. Everyone must me wrapped in cotton wool, never a mean word be said, kindness trumps all.

They actually don't have a lot of confidence in our resilience. It will be fascinating to see how this "not very brave new world" turns out.

by taimaiakka0 | 10th Oct 20, 9:12am 1602274355

Agree that should help everyone but in cover of helping are providing more to speculators and so called investors in garb of helping poor.

What you say is exactly the same argument that reserve bank and govt are using to promote house price rise.

House price going up in multiple is it good for average kiwi or FHB - decide for yourself.

If serious and when cannit act on supply side fast could have acted on demand side specially speculative demand, may be reintroducing LVR for investor to get some pressure off the demand but no intent.

Only thing I like was that RBNZ deputy governor for the first time publicly came out and acknowkedges that are and will di everything ti support rising house price.

by iconoclast | 10th Oct 20, 9:27am 1602275279

A trawl through the Auction results
More passed in this week than last week
A few more selling under July 2017 CV
A good number selling just above 2017 CV

Apart from the usual excellent results in Grey Lynn and Ponsonby
The stand out sale is
2 Cornwall Park Avenue, Epsom on 927 sqm of land
Sold for $4,610,000
1930's buntgalow in excellent condition and/or renovation
Cant make my mind up whether it's an
1. owner occupier in for the long haul, or
2. deep pockets investor taking a punt
3. a redeveloper

Allow $600,000 for the value of the building leaves $4,010,000 for the land
Thats $4,300 per square metre of land
Which is the most expensive land yet in the last 3 months

Some luxury homes in the street, some sausage flats, plus some outdated villas

by Nzdan | 10th Oct 20, 1:09pm 1602288566

Irrational Exuberance.

by iconoclast | 10th Oct 20, 2:21pm 1602292911

Possibly, but I doubt it
I've been trawling through the weekly auction results for some time now
What is noticeable is developers going after properties on big sections
Anywhere within a 9 to 10 km radius of the CBD
Even the developers are competing against one-another
Thus, private buyers of these houses have to compete against developers
They are having to pay top dollar
If this was a private buyer, they got pushed to the very edge

by karl seastrand | 11th Oct 20, 11:05am 1602367526

I hope people endeavouring to analyze property price direction understand how much of a distortionate effect just a handful of $4M+ sales has on average house price sales, especially over short one or three month periods.

by nizzy | 15th Oct 20, 8:59am 1602705597

28 Ridings Road, prime location, older bungalow needs full reno, heritage overlay, 860sqm. Sold for $4.788m 2 weeks ago. Say 700k for house, so $4,700 per sqm for the land.

by printer8 | 10th Oct 20, 9:55am 1602276930

Although I have been dismissive of DGM predictions - preferring to call the market direction as I see it - I feel that RBNZ are over-cooking things.
In response to Covid RBNZ have already stimulated the market through a significant OCR cut, removal of LVRs and protected it to a degree through mortgage deferrals, and - noting my use of "possibility" - they have indicated the possibility of FLP this year, possibility of OCR cuts from March next year . . . and the possibility of not reintroducing LVRs any time soon.
RBNZ actions seem to be the single most significant current influence on the market.
The market is performing better than RBNZ anticipated; early in Covid they were calling a 10% fall (and I think later revised that to 7%).
Given that the market has performed far better than expected, it wouldn't not surprise me if they moderated their possible actions and timings on FLP and OCR using them only when necessary to maintain the market.
Homeownership is more significant in New Zealand compared to many countries (especially in Europe) and - like it or not - housing is an important factor in the state of our economy. Homeowners have significant discretionary spending and their home is important to their perceived wealth and willingness to spend and stimulate the economy.
My call:
- RBNZ actions to ensure a continuing buoyant market while the economy is adversely affected by Covid (for economic stability reasons).
- Post Covid, as the economy recovers, RBNZ will be taking action to cool but maintain the market and endeavouring to avoid a significant market crash although accepting some correction (again for economic stability reasons).
So, continuing bouyant market at least into next year while Covid is about and after that RBNZ looking to a flattish market as economy recovers and less stimulus is needed.

by Rob Reid | 10th Oct 20, 11:09am 1602281348

These look like pretty plausible scenarios to me, especially given we are headed for more of the same govt this term.
I'm not smart enough to work it out for myself but about half the finance geeks I've seen are saying we are headed for deflation and the other half for hyperinflation. If its inflation then surely interest rates will rise, and then we have a wild card that would change everything.
My guess is flat for years, which I think supports your scenarios.

by Pragmatist | 10th Oct 20, 12:18pm 1602285521

If its inflation at below say 5% they may decide to let the market run (a little) hot like the fed (https://www.cnbc.com/2020/08/27/powell-announces-new-fed-approach-to-in…) as they surely will know that all the FHBand investors that are commiting to 1 yr fixes at 2.5% are going to struggle if the rates rise back into the 3s.

Biggest worry for me is stagflation, the worst of both.

by alittle | 10th Oct 20, 11:49am 1602283794

Maybe RBNZ is aware of some sort of crisis comming and we are not otherwise why will they go in for so many extreme action one after another and that too after already boosting the house price more than should have or expected by them.

May be RBNZ expert guiding them though / advising RBNZ is Kiwi by nationality but have speculative asian mindset - is it not possible.

by MortgageBelt | 10th Oct 20, 12:35pm 1602286546

The housing market knows that Labour are likely to be returned so is predicting lots more money pumped into the system. No austerity for at least another 3 years.
The media are pumping Labour, attacking National, and the printing presses keep rolling.

by mikekirk29 | 10th Oct 20, 12:49pm 1602287359

When the blather has finished, cool heads might examine the 12 month sales trend. It is up 9.5% in last 4 months. Compared to flat for prev 3 years.
This is almost excl due to removal of LVR and cutting interest rates by about 30% in past year. But there is a demand limit in numerical terms. No one knows when that limit will be hit, my guess is Feb. However commentators have to also bear in mind that the gov and RBNZ stimulus has been huge. Biggest QE in OECD is being delivered too. Yet Auckland sales will likely not exceed 24500 in the 12 months to end October and NZ as a whole about 74000.
Finally: theory re immig driving demand is or should be dead

by MadMax | 10th Oct 20, 1:07pm 1602288432

More nonsensical analysis
You could just say ‘hey, my guesses have been proven wrong’
It’s no big deal, we live in unusual and interesting times. It’s very difficult and somewhat foolish to predict the medium term future with absolute certainty

by mikekirk29 | 10th Oct 20, 2:28pm 1602293294

Analysis. Not dismissal which is your coinage

by Shoreman | 10th Oct 20, 12:49pm 1602287386

House prices historically have risen more under Labour.

by Tillers | 10th Oct 20, 1:01pm 1602288066

There is a huge amount of supply coming on to the market this week. I expected this to be after the election but surprisingly it’s a couple of weeks ahead. Our neighbour is selling in Royal Oak and agents had advised him to list in September instead of October due to more houses coming on the market and more competition

by Pragmatist | 10th Oct 20, 1:08pm 1602288536

Agent suggesting listing with them now instead of later..well, a real surprise that is. The sooner you/they list the sooner the agent gets paid. Its always a good time to buy(or sell) according to an agent (unless they have a holiday booked, then you should wait a few weeks.)

by mikekirk29 | 10th Oct 20, 1:04pm 1602288296

Re nz listings down about 25% cf a year ago
Meanwhile sales up 45% in Auckland
Plainly velocity and turnover up v substantially as stock on book less time

by taimaiakka0 | 10th Oct 20, 1:59pm 1602291573

Even in London mortage application all time high since last 10 years and housse price rise one of the fastest but predicts fall in future months, which should be the case unless government bring new or extend stimulus for next year (Which all govt may, as have put themselves in a posistion where will be dictared/ forced to print more and more as most government and reserve banks have boarded a one way train unless want to derail)

https://www.theguardian.com/business/2020/oct/07/uk-mortgage-approvals-…

by taimaiakka0 | 10th Oct 20, 7:45pm 1602312300

Australia data on Housing loan. FHB up (very much) and investors down compare to same time last year - So smart money is leaving and FHB are active

https://youtu.be/PHsv4XazfPA

by Malarkey | 10th Oct 20, 9:38pm 1602319124

I just visited the NZ Herald website for the first time in a year or three and wow, the "OneRoof" property spruiking stuff is just insane. Time to rename the paper to the REINZ Herald.

by Brock Landers | 11th Oct 20, 8:00am 1602356453

The herald is an abortion.

by karl seastrand | 12th Oct 20, 11:28am 1602455318

The Herald...oily, greasy fish n chip paper
One Roof newsletter... used, outhouse dunny paper

by karl seastrand | 11th Oct 20, 11:46am 1602370000

Ashley Church, the most infamous One Roof spruiker is in Chch today attempting to convince us that we should support a regime that systematically segregates and divides based on ethnicity, jails children for years without trial, demolishes family homes as collective punishment and even discriminates between black and white jewish migrants. Today he will attempt to label anybody who dares to criticize such abhorrent behaviour as anti-semitic.
Go and listen to get an indication as to the type of poisonous, biased characters One Roof choose to be their mouthpieces. It should help you to understand how much attention we should (not) be paying to what these publications and their contributors say.

by swingtrader | 11th Oct 20, 2:24pm 1602379498

Why is no one paying attention to the trajectory of the virus in USA and Europe and see that their economies are in for a very rough outlook for an extended period of time?

Does no one put that together with the potential for ongoing massive GDP contraction, complete economic meltdown and credit crunch scenarios over there that will be felt around the world, including in NZ too!?

But no, the Reserve Bank is handing us all truckloads of cheap money to buy up over valued houses to give everyone an artificial feeling of wealth. Get everyone overhyped on “property wealth creation” and worse, create moral hazard by signalling to us that no matter what, the powers that be will prop this sucker of a housing market up.

All the while let’s pretend that we are so insulated from anything happening around the world. But we can’t import hundreds of thousands of immigrants this time round to save us from economic Armageddon but as long as everyone keeps doing their bit and adds to their property portfolio we’ll be fine.

Banks get hell of a nasty pretty quickly if they catch a whiff of their assets deteriorating. And all those people buying now with little margin could get burned badly.

by brisket | 11th Oct 20, 8:59pm 1602403180

I think they’ll try cranking up the immigration again tbh... even if there aren’t any jobs for them here, there are plenty of desperate people in the world. It’s stupid, but that’s what will happen.

by Northern Lights | 11th Oct 20, 10:19pm 1602407951

@swingtrader

If the Democrats get the Presidency and both houses of Congress following the US election then there will be a large fiscal stimulus bill passed. Which will be financed by the US Federal Reserve. The issuing of lots of US Treasury bonds will send the $US down. The Fed will keep going on the monetary stimulus side as well with as many measures as it needs to deploy for as long as it takes to get inflation near 2%. If any foreign nations want to keep their currencies at parity with the $US in the face of this wave of liquidity then those nations will have to take similar actions to the US authorities.

When you are pointing out the waves of Covid 19 in Europe and elsewhere you are pointing to the probability that those regions will be doing either more fiscal or more monetary stimulus or both, to keep their populations from going down the economic gurgler.

From the comments on this site it's clear that the majority of punters don't get it. Yelling at your local Reserve Bank Governor orlocal politicians is a waste of time because the tide of liquidity is nothing to do with them. They can't stop the wave. The wave is coming from overseas and is not subject to local control.

If your dollar rises due to a lack of 'money printing' then your export industries go down the tubes along with businesses suffering from a lack of liquidity. The income producing assets of your nation stop producing as much income and the price of those assets fall.

If your dollar rises in tandem with the $US because your Reserve Bank is issuing bonds sufficient to offset the $US money printing then you are keeping the value of your national assets stable in $US terms but the price of those assets is rising and interest rate you get from those assets is falling. The income from that asset in local dollars may stay the same though. 6% of $100 is $6. If the asset price doubles and the interest rate halves then you are getting 3% of $200 = $6.

Asset prices are rising because interest rates are falling worldwide. It is driven by $US decline. It is happening everywhere not just in the New Zealand property market. People are searching for a return on their capital in a situation of a reducing pool of quality income producing assets.

If you think 'why can't we just have a recession and a reset and a lot of cheap houses to buy?' If you have a recession people lose their jobs and can't afford to rent the houses. Businesses go broke. The income producing asset pool decreases. National has a hard enough time getting voters now, you put the country into a depression and no wealth tax and a top tax rate of 39% will not last very long with the social pressures building up now let alone with say 15% unemployment.

What is needed is balance. There is too much user pays. There are too many fees to pay for services that used to be free in the past. There is too much debt foisted on the younger generations where debt was not needed to pay for things in the past.

If you want to bring back balance to the New Zealand society then cut some of the obligations that ordinary people face. Retire a portion of student debt owed to the govt and give a tax refund for a proportion of student debt already paid. Pay the councils more from the govt coffers to meet their obligations and require that rates are reduced and that govt money is spent only on essential services. Reduce the opportunities for charging user fees by having simple national rules and govt paid inspectors rather than private testers who benefit financially by failing those sitting the test or having to meet the requirements.

by Zachary Smith | 12th Oct 20, 6:12am 1602436324

If interest rates halve then asset values double - that's a scary thought.

Good comment though and something to think about. It make more sense if you realise that things are largely out of the control of the RBNZ.

by b21 | 12th Oct 20, 9:00am 1602446401

"a slow down in activity looks unlikely for the time being"

Is this because of the feedback of agents or buyers, historic trends with similar data? Good reporting should not just estate an opinion, but support it by facts unless this is an opinion article of course.

If we stick to the data given the sale rates is easing we should assume the opposite.