Barfoot & Thompson's auction rooms charging ahead with a full head of steam

Property

Activity continues to gather pace in Barfoot & Thompson's auction rooms

17th Nov 20, 9:37am by Greg Ninness

Activity is going from strength to strength in Barfoot & Thompson's auction rooms with the agency handling 290 auction properties last week (7-13 November).

That compares with 258 auction properties the previous week, 243 the week before that and 214 the week before that.

This suggests the market is showing no sign of slowing down as it heads towards its last big rush before the Christmas/New Year break.

The overall sales rate was also up slightly for the week at 60%, compared to 59% the previous week and 54% the week before that.

The central Auckland suburbs were the busiest with 77 properties going under the hammer and sales achieved on three quarters (74%) of them, while the Manukau auctions were just as busy, handling 77 properties and an overall sales rate of 56% (see table below for the full breakdown).

Details of the individual properties offered and the results achieved are available on our Residential Auction Results page.

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81 Comments

by b21 | 17th Nov 20, 9:42am 1605559351

Clearance rates remain at levels lower than what we saw two months ago.

https://i.postimg.cc/4NhNGvtd/BT-clearance-rates-3w-trend-w46.png

by Poppyc | 17th Nov 20, 10:55am 1605563738

Pardon my ignorance but what is the relevance? I would expect the rates to be relatively flat as vendors set expectations (reserves) on what has happened the past few weeks so a bit of a lag effect, perhaps.

by b21 | 17th Nov 20, 11:13am 1605564787

It shows the auction market seems to have started to cool down since a few weeks ago.

by Poppyc | 17th Nov 20, 11:26am 1605565618

But has it cooled because of a downturn in buyers, or because vendors have raised their expectations? The nuance to me on a rate being between 55-65% seems more like settling in rather than a sudden change that indicates a hot or cold market. Surely there is a rate that marks the turn on either sides?

by b21 | 17th Nov 20, 11:34am 1605566052

Note I have calculated the moving average so this accounts already noise. Either way prices will go down from now if B&T wants their vendors to sell at the rates they did at the peak.

by Yvil | 17th Nov 20, 2:17pm 1605575874

"prices will go down from now..."

Here is the true reason for b21's posts, he/she wants house prices to go down, any real data has little relevance to him/her, he/she will nit pick in the hope of finding the smallest sign that could support a price drop.

by b21 | 17th Nov 20, 2:27pm 1605576426

Why are you being so doom and gloom Yvil, try to see the positive side of things. As much as most of us want prices to go down I am not basing my impressions in wishes but just in the data that all of us have access to.

by printer8 | 17th Nov 20, 1:39pm 1605573546

b21
It is correct that the clearance rate may be showing a decline.
However your conclusion that your data "shows the auction market seems to have started to cool down since a few weeks ago" is not a valid conclusion if "cooling" means that the the state of the market is negative.
To be able draw that conclusion your premise negates three important measures; the number of properties bought to market, the number of sales, and prices achieved.
Your graph proports to show a trend of a declining market over the past 15 weeks - that is utter rubbish. Your methodology and conclusion are flawed.
Recent REINZ monthly data clearly shows the opposite to what you claim. The latest report shows that for October Auckland median prices were up 4.7% for the month of October (16.3% YOY) and sales were up 5.5% for October (50.9% YOY) and October - and this is within the 15 weeks of data you claim to show the market trending down.
You need to critically look at your methodology and data in terms of reality and question as to whether you have a strong bias and are simply trying to provide conclusions to support a case that is divorced from reality.
Personally, I am concerned about the unsustainability of current prices rises and the risks that it proposes - but providing such data to support a false narrative as you do does not add to the recognition of the extent of the problem nor the need for this to be addressed.

Note: You specify that the market has "cool down since a few weeks ago" is arguably not supported by your data which shows increases over that three week period.

by b21 | 17th Nov 20, 1:51pm 1605574273

Why are you being so negative? This is good news and based on the data reported by B&T which you can find on this website.

by printer8 | 17th Nov 20, 2:08pm 1605575326

b21
Not being negative at all.
Just correcting your misleading assertion.
Your suggestion that "the market is cooling" suggests that we are going to see declining prices this side of Christmas - this seems unlikely and contrary to the many screaming for the the need for immediate need of LVRs to "cool the market".

by b21 | 17th Nov 20, 2:28pm 1605576485

I haven't made any prediction with the timeline you are suggesting, just shared the data for everyone to see.

by Bugger | 17th Nov 20, 1:43pm 1605573794

At this rate, it should be compulsory for everyone to have a RE license...it will bring us all out of poverty. Forget tourism, farming, manufacturing...we have property. We can even export our RE agents, take over the world.

by Yvil | 17th Nov 20, 11:08am 1605564501

There is nothing stopping you from getting a RE license and partaking in the fun

by b21 | 17th Nov 20, 11:26am 1605565568

Is it fun to you to have hyperinflation in an asset which is required for people to live in?

by Bugger | 17th Nov 20, 1:43pm 1605573828

Seriously, I was thinking about it.

by Te Kooti | 17th Nov 20, 1:48pm 1605574135

A long as you're not the grunt door-knocking and cold-calling to get listings. It's not that glamorous at the bottom, but you can write the Urus off against income on the bright side.

by J.C. | 17th Nov 20, 3:39pm 1605580744

What if you're an ex-Shortland Street star or retired rugby player with a bit of a rep? Easy money.

by Fritz | 17th Nov 20, 11:18pm 1605608318

There's nothing stopping people doing all sorts of legal things that can generate good income eg. Prostitution. Whether it is fulfilling and contributing to the greater good is another question.

by xingmowang | 17th Nov 20, 9:59am 1605560365

Labour is doing every NZer a favour by saying but not delivering.

Property price will double during the next three years boosting by the opportunities, development, increasing income from ASEAN countries as a result of the RCEP.

Oh Yeah..

Keep buying guys.

by mikekirk29 | 17th Nov 20, 10:30am 1605562231

There is in fact evidence that the market is slowing - RE NZ new listings per day.
Readers might take the trouble to keep an eye on this metric which shows push factor of sellers.
It peaked at 256 per day on November 5th
It then averaged 225 for a bit but is now below 180.
Turnover is dropping a little and consequently the total of all listings is rising, at last, but still 20% odd below last year.

by b21 | 17th Nov 20, 11:27am 1605565653

Yes, noticed that too, following the clearance rate moving average tells the same story, check my post above.

by printer8 | 17th Nov 20, 12:16pm 1605568560

Mike
What do you mean by “the market slowing”?
Do you mean that prices or just turnover is slowing?
Your comment has a negative connotation as to the state of the market direction. Be aware that listings could well be down as some - especially investors - are not listing as they see upside in prices; this is not a negative connotation as to what is considered market direction.

by b21 | 17th Nov 20, 12:27pm 1605569220

printer8 This is indeed a very positive thing, the market slowing down means the likeliness of more affordable prices in the future is higher. We all want a country where quality housing is available at prices people can afford. True it may affect investors but hey they took the risk and nobody asked them to do so.

by printer8 | 17th Nov 20, 1:44pm 1605573857

b21
Your comment is really divorced from reality. As my post above in response to your flawed conclusion and Mike's assertion shows there is no cooling of the market.
REINZ Auckland median prices for October were up 4.7% for the month and sales up 5.5% for the month which from memory if not records for October were close to it. That is not a cooling market.
Yes, there is need for the market to cool - but both you and Mike are in denial and add nothing by saying that the market is cooling.

by b21 | 17th Nov 20, 1:53pm 1605574408

We are just looking at the data, of course REINZ is reporting also data (unrelated to this discussion BTW) which is relevant but it is delayed compared to this. Try to see the positive side of things.

by printer8 | 17th Nov 20, 2:16pm 1605575773

b21
REINZ data is not irrelevant - it shoots a bl**dy big hole in your false narrative! :)
As for you "just looking at the data": a basic principle: don't look at data with a preconceived bias.
As mentioned I want to see a "cooling of the market" in terms of prices but please stop giving me false hope. Start looking at the data critically and stop kidding yourself that it is currently occurring. :)

by b21 | 17th Nov 20, 2:29pm 1605576557

I am not trying to give you any hopes, just presenting the data as it is, you get your own conclusions mate.

by printer8 | 17th Nov 20, 3:34pm 1605580471

b21
I'm not stupid.
You are not "just presenting data as it is" but also drawing a conclusion - "the market is cooling" is a conclusion.
I do not take issue with your raw data - I take issue with your (selective) use and interpretation to the data to draw what I consider to be a flawed conclusion.
Now that we are "mates" - Cheers :)

by Yvil | 17th Nov 20, 2:33pm 1605576821

Great post P8, spot on

by mikekirk29 | 17th Nov 20, 12:37pm 1605569846

Hi Printer,

no there is no negative connotation intended.
Rate at which new listings is slowing, ie going down. The 5.7 day average is 183, including today.
I use 5.7 because most listings are added in the morning.
I agree with your point re investors "not listing" for price expectation reasons.
However, that would be opposite of FOMO for buyers!
That seems to suggest you feel investors are also sellers as well as buyers, but of course a key unknown is what ratio is of buyer to seller in terms of investor class.
My general sentiment at present is that market pricing is not slowing but that seller flocking to market is slowing.
And that, at this time of year, that is not normal, as normally such a trend does not set in til around December 10th or later and then lasts for 5-6 weeks from then before accelerating again for the summer market peak. I feel that demand has been pushed into a concertina effect by removal of LVR, plus pulled forward due to lowering of rates. This set of facts is however in flux and push factor of it is not a constant, so seller input is reducing prematurely.
I remain of considered view that a mania phase of market could be driven by desire for lower pop density places to live, esp driving NSC and central Auckland sales
but primarily it is out of synch as demographic push is not present , as in 40-47 year olds in pop does not peak again until late 2023

by printer8 | 17th Nov 20, 1:52pm 1605574364

Mike
"My general sentiment at present is that market pricing is not slowing but that seller flocking to market is slowing".
I have no problem that listings may be down.
However note that the most common used measures of the market - sales and median prices - for the month of October were exceptionally high (REINZ). Most people would not call that a "cooling market".
In fact a shortage of listings has the potential to drive prices up further and in such a situation please do refer to this as a "cooling market".

by alittle | 17th Nov 20, 10:35am 1605562500

Thanks Mr Orr.

by Ryu | 17th Nov 20, 10:48am 1605563337

What I am finding hard to digest as a potential buyer is that of those 290 properties listed at auction you need to be unconditional. Every home that meets requirements and where people are prepared to make an offer, they need to carry out due diligence at the cost of $1,000+ (lawyers, building report, LIM). As you are competing with 30-40 others on a single property that is quite a bit of money collectively. So, 290 homes*35 offers*$1,000 = $10,150,000 just in one week, one RE agency, one city! Builders, local councils, and Lawyers must be creaming it. Would like to see some official figures in these areas.

by Poppyc | 17th Nov 20, 10:59am 1605563944

I think you would be surprised at how little due diligence is under taken. I know when we purchased that we were the only ones that had a building inspection done on the property, and we weren't bidding against ourselves.

by nizzy | 17th Nov 20, 1:41pm 1605573667

I agree. In my experience builders reports are often simplistic and for most houses not worth the money. And given the uncertainty of the auction process in a hot market a buyer can't afford to get report after report done.

by Slapheid | 17th Nov 20, 11:24am 1605565449

All of the properties I've been eyeing up are going for well in excess of their RV. The bank will lend 79% of the RV, but that will not get you anywhere on auction day.
As well as watching the market accelerate out of reach in the last year, I have also had my deposit depleted through the cost of unsuccessfully attending auctions. As Ryu points out: Solicitor, building report, valuation LIM etc)
It really does feel like its one big racket...
How about a system such as Scotland's, where vendors are required to provide a Home Report pack, including a building survey, valuation, energy report and details of any alerations/consents etc

by Poppyc | 17th Nov 20, 12:31pm 1605569470

You may need to get onto your bank to get them to provide better service. They should be offering free basic valuation reports (e.g. corelogic) and giving a pre-approval up to a certain limit in reference to it. I.e. the cv should be complemented in some respects based on the third party report and your serviceability of the loan. it's at that point they should be saying that proper valuation needs to take place prior to auction.

But I agree, auctions are rackets in that they do not allow conditional terms to avoid people wasting their money and any conditional pre auction offer will just set a baseline minimum that the vendor thinks they will get.

by Nifty1 | 17th Nov 20, 1:13pm 1605572032

Try another bank, each of their criteria around this is quite different.

by Shoreman | 17th Nov 20, 10:53am 1605563586

I'm glad I never ever took any notice of DGM's around property, 38 years in the market to date !

by Slapheid | 17th Nov 20, 11:38am 1605566297

Yes, a lot of folk will be kicking themselves for short-sightedly being be born too late.... they wont be making that mistake again!
Not sure what advice I should be giving my kids now though. "Stiff biscuits, you've missed out?" or more helpfully "Don't get married or have kids, save every penny you can and by 2050 you might be able to pool deposits with other 40yr old mates to get into a house (in Greymouth)"

by printer8 | 17th Nov 20, 1:59pm 1605574740

Slapheid
"Yes, a lot of folk will be kicking themselves for short-sightedly being be born too late...."
The reality is that a considerable number of posters on this site will be kicking themselves for being short-sighted, two months ago, six months ago, a year ago, two years ago, three years ago, four years ago . . . . for calling bubble burst rather than buying.
All knowing and confident at the time but now claiming their misfortune is because they were born too late - a lame self-appeasement comment.
Cheers :)

by J.C. | 17th Nov 20, 4:20pm 1605583252

The reality is that a considerable number of posters on this site will be kicking themselves for being short-sighted, two months ago, six months ago, a year ago, two years ago, three years ago, four years ago . . . . for calling bubble burst rather than buying.

Of course you're talking about NZ houses not Bitcoin. The Bitcoin 'bubble' did burst. But it's now on its way up, partly because of all the money printing that is destroying value and propping up the NZ property bubble.

Funny old world.

by Portland | 17th Nov 20, 4:48pm 1605584896

6 months ago. The RB and all NZ banks were predicting house price reductions and increases in unemployment following the lock down. For a FHB do you think it would have been wise to enter the market at that point given these predictions?

by Fritz | 17th Nov 20, 11:43pm 1605609793

Even Tony 'House Prices will never fall' Alexander was picking a 5-10% fall.

by Yvil | 17th Nov 20, 2:37pm 1605577038

Slapheid, no doubt you will be giving your kids advice to "blame all the things that are out of your control in life and don't focus on what you can actually do yourself to improve your life"

by Slapheid | 17th Nov 20, 3:22pm 1605579772

How very presumptuous.. Actually Yvil, I'm more of a "own your choices and control your controllables" type of Dad. That and "never eat anything bigger than your head"
Seriously though, if property values keep outstripping salary increases at this rate, I really worry that my kids will struggle to ever have their own home.
Do you honestly see this trend continuing for the next few decades? forever?

by Te Kooti | 17th Nov 20, 3:48pm 1605581336

I see mortgage rates settling at 2% long term. That is $24k per annum to service a $1.5m property with a 20% deposit - easily doable for a professional couple. That is where I pick the Auckland average to go within 5y.

by Portland | 17th Nov 20, 4:49pm 1605584985

Professional Couple - Auckland Average.. Are those the same thing?

by Portland | 17th Nov 20, 4:53pm 1605585211

Also a $1.2m mortgage at 2% interest is $53,000 PA. for a 30 year term...

by Te Kooti | 17th Nov 20, 7:01pm 1605592893

I obviously didn't do p&i fibonacci.

by Portland | 18th Nov 20, 8:56am 1605642962

It's only double the cost to service the mortgage to what you said. Lets say a bank will only lend you 5 times your income, you would need $240,000 a year to service a $1.2m mortgage. Average household income in Auckland is just over $100,000 so you would need to be earning more than twice the average household income to service a mortgage of what you are predicting to be the average house price.. Doesn't seem to add up.

by Fritz | 17th Nov 20, 11:31pm 1605609062

About 1k per week, ahhh nothing!!! Don't forget rates and insurances - - oh just more small change!!!

by b21 | 17th Nov 20, 4:57pm 1605585436

Agree, 2% and lower rates will be there for a long time, which should alleviate the FOMO some seem to have these days, however your example is far from being realistic given the actual salaries we see, furthermore saving for 20% deposit on a 1.5m house (300K) is not something that is close to being feasible for most, not if you have a rent to pay at least.

by Te Kooti | 17th Nov 20, 7:08pm 1605593309

I agree the deposit is going to be a challenge, but that is a $1.5m house so in todays market that would get you something ok?

I, like many, are resigned to "assisting" the kids.

by Fritz | 17th Nov 20, 11:21pm 1605608516

Man what drugs are you on, I want some of them!
A 300k deposit 'easily doable'????

by Yvil | 17th Nov 20, 4:01pm 1605582102

Well blaming the time when you're born is not, I quote you: "own your choices and control your controllables".

Yes I honestly see the trend of higher house prices continue for this decade at least. (note I'm not casting a judgement of it being good or bad)

by al123 | 17th Nov 20, 3:41pm 1605580870

The real danger in what you're saying is the attitude it encourages people to take towards politics. The decisions made by those in government affect housing affordability, and those decisions arent - and shouldn't be treated as - out of our control.

A lot of our hard won rights - womens suffrage, the 8 hour day, land rights - have been achieved precisely because brave people didn't just assume that the decisions made by government were something they just had to put up with, and because those people focused not just on improving their own lives but on the lives of others too

by b21 | 17th Nov 20, 11:42am 1605566554

It was an easy thing to do in the housing market from 38 years ago, much different from the one the newer generations need to face these days in which they must be very careful if they don't want to end up in a lot of trouble.

by printer8 | 17th Nov 20, 2:19pm 1605575995

b21
Latest RBNZ mortgage data shows that September was the highest number of FHB since data collected and first published in August 2014. :)

by b21 | 17th Nov 20, 2:30pm 1605576625

What this comment has to do with mine has me intrigued.

by Cowpat | 17th Nov 20, 2:57pm 1605578255

I believe it is reference to the the storming collective of first home buyers who are currently willing and able to trample all paths into home ownership. It should be noted in fairness that April , was the lowest month for FHB since the RBNZ commenced this data series.

by Portland | 18th Nov 20, 9:03am 1605643434

Yes the first home buyer, who's deposit has had to be begged from their parents or by guaranteeing equity from their own home.

by ngakonui gold | 17th Nov 20, 1:15pm 1605572150

Just received aLugtons Hamilton flyer in my mail box very proud of the fact that they had sold a nearby property for 155k over the CV.
Sold for 865k.
Presumably the new buyers will think that their new purchase will be worth a million in a couple of years.
You would have to be brave to say it wouldn't be.

by realterms | 17th Nov 20, 2:42pm 1605577364

One near me recently went to auction with "must be sold on or before auction day, ignore cv". Didn't sell on the day, now asking 98% of cv....

by b21 | 17th Nov 20, 2:54pm 1605578094

Well they wouldn't send you a flyer with the information about those properties they sold under CV right?

by delboy | 17th Nov 20, 2:53pm 1605577992

NZHerald today - "Prime Minister Jacinda Ardern has hinted the Government is looking into ways to help first-home buyers onto the property ladder by tinkering with the restrictions of its home-buying subsidy scheme".

Does she not realise that subsidising FHBs into the market will send house prices even higher.

The road to hell is paved with good virtue signalling.

by b21 | 17th Nov 20, 2:58pm 1605578282

This is exactly what Morrison did in AU, resulting in prices of home and land packages going up pretty much overnight by 50K. The solution is not to push from the bottom but from the top making already existing closed homes available to the market.

by Rex Pat | 17th Nov 20, 3:14pm 1605579258

I’m listening. What are you proposing? Has it been done elsewhere and if so what was the outcome?

by iconoclast | 17th Nov 20, 3:49pm 1605581363

Yes house prices rose immediately
Federal Government First Home Buyer Grants coupled with State Government First Home Buyer Grants
Prices rose by the amount of the grants of $50,000

by b21 | 17th Nov 20, 3:37pm 1605580674

It is not that there are not realistic and feasible options we could use, although the neoliberal textbook seems to act as a blindfold for our politicians. Just as a starter, reimpose LVR restrictions and ban housing investment until we reach the same affordability levels we used to have 30 years ago, or at the very least impose a CGT which would discourage investment in first necessity assets at the levels we see these days. Also a tax on closed properties in high density population areas (~50K just in Auckland) would encourage making those available for rent, and in some cases we will see those back into the market which will increase offer. We do have options.

by Believer1980 | 17th Nov 20, 5:03pm 1605585802

By banning housing investment, you surely mean banning private individuals, who already own 1 or more houses from being able to buy houses, whether existing or new. You want only first home buyers and government to be able to invest in houses. I also suppose you want the government to lend FHB to buy their houses. It will be an interesting experiment. I think it will work if the new neighborhoods that are constructed are as attractive, or hopefully even more attractive to the existing suburbs. An ambitious and very capable enterprise may be able to deliver on that. Otherwise it will be a total flop.

On CGT, you are being very hopeful. Money is not in property because of lack of CGT, it is a cherry on top of the cake, but as long as there is absolutely no business opportunity for investing, money will flow to property.

by b21 | 17th Nov 20, 5:34pm 1605587684

Agree, there is no silver bullet, but at least we should start shooting somewhere that is not our own feet.

by Nifty1 | 17th Nov 20, 3:41pm 1605580864

Yeah WTF is she thinking ' damn, prices are getting high...let's increase the FHB grant, that'll help things right?'

by StuckAtHome | 17th Nov 20, 3:48pm 1605581317

Yep, she doesn't have a clue.

by Adam B NZ | 17th Nov 20, 4:29pm 1605583787

If the market is booming, why are the Shore Auctions lacking? Only 25 sold out of 56? Whats going on Barfoots?

by Yvil | 17th Nov 20, 4:45pm 1605584742

There is a higher proportion of asian people living on the shore, since CV, there has been more asian people leaving NZ than arriving into NZ

by Adam B NZ | 17th Nov 20, 4:47pm 1605584875

Could be. I'm hoping to see an increase in the French population over here in the coming years.

by Yvil | 17th Nov 20, 5:30pm 1605587453

Moi aussi, merci ; )

by Poppyc | 17th Nov 20, 5:18pm 1605586719

Harcourts does a reasonable job in the nsc. Last 7 days they have sold 26/36 on nsc.

https://www.cooperandco.co.nz/harcourts-cooper-co-auction-results-2020/

by Fritz | 17th Nov 20, 11:25pm 1605608727

It's fascinating how obsessed some people here are with property prices. There's a few people who post a lot on house price articles and are nowhere to be seen on Interest's many other interesting articles.

by estateagent | 18th Nov 20, 10:32pm 1605691941

The vendors have now got very greedy - so much reporting across all forms of media has seen vendors put their head in the clouds and increase their reserve prices. Many auctions now becoming negotiations on the auction room floor rather than classic auctions, often reserves are adjusted mid auction. Also have a problem now as the council are no longer issuing urgent LIM reports - now you have to wait up to 10 working days for a LIM.
Some sellers have even pulled their auctions at the last minute and decided to try again in March in the expectation of getting 10% more - and they probably will the way things are going.