Property auctions sizzled in January

Property

Massive annual increase in both the number of properties auctioned and the sales rates achieved in January

6th Feb 21, 8:13am by Greg Ninness

Auction room activity started 2021 with a hiss and a roar, with auction numbers and sales rates both up substantially compared to January last year.

Auctions were particularly strong in Auckland where interest.co.nz monitored 214 auctions in January, up from just 76 in January last year.

Not only were more properties brought to auction, but more of them were sold, with the sales rate climbing to 77% last month compared to 61% a year earlier.

The numbers also suggest that rating valuations have become a lot less relevant to selling prices.

In January last year only 50% of the sales at the Auckland auctions monitored by interest.co.nz achieved prices above the properties' rating valuations, but in January this year 96% of selling prices were above their rating valuations.

Auction activity was also up sharply in the Bay of Plenty, where interest.co.nz monitored 40 auctions in January compared to 32 in January last year.

But the sales rate in the Bay of Plenty showed even more impressive growth, rising to 88% compared to just 50% a year ago.

Prices also look firmer, with 97% of the properties sold achieving prices above their rating valuations, compared to just 47% a year ago.

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

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34 Comments

by tothepoint | 6th Feb 21, 11:46am 1612565193

All very unsurprising.

TTP

by keithwoodford | 6th Feb 21, 1:45pm 1612572354

But reinforces the evidence as to what is happening.
There is still a lot of money parked in banks deposits that is looking for a home.
KeithW

by Flying high | 6th Feb 21, 2:51pm 1612576266

Bank deposits are growing not shrinking

Reserve Bank statistics show household deposits have grown at their fastest rate in four years while, the amount owed on houses just had its biggest monthly rise in 13 years | interest.co.nz
https://www.interest.co.nz/personal-finance/107301/reserve-bank-statist…

by Nzdan | 6th Feb 21, 3:13pm 1612577638

On the other side of a house purchase with mortgage is a vendor with a bank account. Money isn't "tied up" in housing.

by keithwoodford | 6th Feb 21, 3:16pm 1612577771

Yes, one of the fascinating things about money systems is that credit creation in one part of the system leads in short order to new deposits elsewhere in the system. This is part of the reason why bubbles can continue to grow for a long time.
KeithW

by bw | 6th Feb 21, 3:45pm 1612579544

And it gets fascinating when the new debt (a new mortgage to finance a property purchase) is used to discharge an existing mortgage. ie: it doesn't get fully recycled.
eg: Mortgage created for $1 million to finance a $1,200,000 place. That $1.2mio gets paid to the vendor who repays an existing mortgage of, say, $800,000. One million in new debt is created and only $400,000 residual if left for the vendor to use.
When debt stops being created and fully used, we have a problem WHEN the price of the assets underlying the debt stalls or, (shock horror!) falls..
That's why we have QE; Unconventional Tools spewing debt into the System. Because if an individual won't, or can't, take more debt on themselves, it will be done for them in the name of 'their' Public Debt.

by Flying high | 6th Feb 21, 3:34pm 1612578897

So you could say that our savings rate is increasing too.... two birds, one stoned

by bw | 6th Feb 21, 3:41pm 1612579263

At some stage, current owners/vendors are going to take the money off the table and leave the new players too it.
It makes sense that at even 0% they'd be happy to do that. They've run the risk; made their return and can now stand back and watch the game from the security of distance.
As I've long suggested, the lower rates go, the more people will save, for all sorts of rational reasons.

by Thinker | 6th Feb 21, 1:54pm 1612572862

Went to the auction rooms on North Shore Auckland on Thursday night - 12/12 properties sold and everything was mad. One house valued at 1-1.05m sold for 1.45m and all the agents were laughing and saying is there gold there or something? Just mad and I dread to think how much additional FOMO causes FOMO based off that.

by Jay Lim | 7th Feb 21, 1:17pm 1612657059

Yes I went there too. The most surprising thing was the quality of houses sold at auctions.
Usually better conditioned houses used to be sold at auctions. but not any more.

by K.W. | 10th Feb 21, 3:15pm 1612923326

In discussions with a RE agent last week who said the Christchurch market is just crazy too. A house built in 2018 and sold soon after completion for $1.2m just sold again at auction for $2.2m. That's one million dollars in just 2 years.

by bw | 6th Feb 21, 2:44pm 1612575865

Act leader David Seymour has lambasted the Government for what he is describing as a laundry list of failures, including overseeing the greatest transfer of wealth in New Zealand's history....the average wage for a worker is $55,000 but in 2020, the average house price went up more than twice that, by $121,000, from $628,000 to $749,000....(Labour has) just overseen the greatest transfer of wealth from those who work to those who own in the history of our country."... Speaking to reporters, Ardern said the Government was looking into how it could ...(blah,blah,blah)

Seymour is on the side of politics I'd normally lean towards, and having given Labour; the Party of the People, a go last time; in the idiotic belief they'd actually achieve something tangible for the country, I might have to give him a go next time. That's IF he doesn't muck it up in the meantime. Then, will I get to be disappointed again? It's worth the risk.

by sparrow | 6th Feb 21, 4:56pm 1612583774

The deputy leader of Act wrote a stupid article for the Herald, about how people liked to blame immigration for high house prices when really it was only lack of supply. She lost me at that point.

by powerupkiwi | 8th Feb 21, 3:57pm 1612753026

Do we get worried we will run out of cars when population increases? Do we get worried that food, electricity, or bowling alleys will become scarce?

The market is busted. Supply is the issue.

by Lord Dowding | 6th Feb 21, 8:32pm 1612596745

Why can’t people understand that it is the serviceability that determines if something is expensive or not, not the nominal price to income. In that regard it’s actually become more affordable to buy a home certainly before this latest surge begun.

by Rob Reid | 6th Feb 21, 8:58pm 1612598290

Yes, but there is also the risk of interest rate rises (and unemployment).
Perhaps people committing to a 30 year mortgage only care about this year?

by Carlos67 | 6th Feb 21, 8:32pm 1612596735

Already voted for ACT for the first time last election, saw right through Labour and simply couldn't vote for them and National was a shambles.

by CWBW | 6th Feb 21, 2:48pm 1612576087

Excellent results!

by dago | 6th Feb 21, 3:51pm 1612579862

Obnoxious RE trying to turn Wellington into little Auckland, how pathetic https://www.trademe.co.nz/a/property/residential/sale/wellington/wellin…

by Rob Reid | 6th Feb 21, 8:59pm 1612598398

Ha! "Enquiries over $1,295,000". I fold.

by Flying high | 7th Feb 21, 11:59am 1612652361

What price would you expect Rob I think if it was actually in Ponsonby Auckland the price would be 2 or 3 mill

by Rob Reid | 7th Feb 21, 1:24pm 1612657472

I folded, so I don't need to reveal my hand.
But I will anyway - $400k. In other words, my price expectations are multiples out of whack with any NZ market, because I think we are headed for hyper inflation and rate rises.

by kiwikeith | 6th Feb 21, 4:09pm 1612580945

Adern does not have a f******n clue. There are kiwis sleeping in cars, garages and caravan parks and over 20,000 waiting for a state house. What does she do? - decide to restart the refugee programme. So thanks to the down and out NZers who have been leapfrogged on the right to half decent housing. Your sacrifice is much appreciated and although Adern may get the international accolades your contribution is not forgotten.

by richard1965 | 6th Feb 21, 4:15pm 1612581351

When even rubbish starts going at premium indicates that market is in danger territory so short term speculators specially first timers have to be cautious ( people who have speculated number of time and have made print in most occasions can afford to take a hit). Also FHB should be fine if have not borrowed beyond.....as are in long term.

2021 will be interesting year to see asset valuation / ponzi as what is happening now happened in 2016.

by Theoracle | 6th Feb 21, 6:31pm 1612589498

Haha too funny... that RE agent used to work in the prime ministers office!

by dago | 7th Feb 21, 10:40am 1612647618

Kachinga must have tipped her off

by CWBW | 6th Feb 21, 8:37pm 1612597025

If you intend to buy a median priced house in 3 years time with a 10% deposit, you should be saving $31,398.95 per year (incl. price inflation) for the deposits.

It's actually perfectly doable to purchase a house based on the average household income of $102,613 (June 2019, Stats NZ) especially if you include your KiwiSaver as part of your downpayment.

If only everybody start working on it, home ownership is absolutely achievable- unless you want it now, or work is too hard.

by Rob Reid | 6th Feb 21, 9:03pm 1612598590

What do you do for a living, CWBW?

by kiwikeith | 7th Feb 21, 9:33am 1612643605

Professional agitator probably.

by karl seastrand | 7th Feb 21, 6:58pm 1612677513

I am guessing he is a real estate agent who maybe works part-time at the comedy club down the road.
Average household wage of 100K less 20K tax, less 25K rent, less 15K food. less 30K house deposit leaves 10K.
So that is $200 a week left for car and petrol, clothes, entertainment, holidays, kiwi saver, insurances, electricity, internet, water, coffees and a monthly subscription to flat earthers magazine.

by CWBW | 7th Feb 21, 7:27pm 1612679240

The amount needed to set aside per year depends on the time frame people choose to buy a house with the 10% deposits excluding Kiwisaver:

5 yrs - 22K,
8 yrs - 17K,
10 yrs - 16K.

People who wants to buy a house but can't give up on their smashed avocados, entertainment, holidays and coffees deserves a lifetime subscription to their flat earth magazines.

I'd seen for myself the multitudes that bought their houses based on median household income throughout the years- now tell it to them that it's impossible.

I'm not a RE agent, I have better work than them and they worked well for me.

by karl seastrand | 8th Feb 21, 11:57am 1612738661

CWBW... I thought your post was looking at $31K PA over 3 years. I will read more carefully in future. If we take the time frame out to 5 or 10 years as per your second post (and prices go up as fast as you are predicting) then the potential FHB would be back to square one ie they would need to save another 100K to get the 10% deposit which would then be $200K.
As the poster below says, it is doable but today people without help from parents have to sacrifice absolutely everything that costs for a few years. The calc also excludes anyone with kids, anyone single not earning 100K + and anyone with existing debt. Very very tough these days.
Just bought a new $1200 coffee maker yesterday and the Mrs will be out in the garden digging holes for the avo trees come winter. Can't shake my Auckland roots. And I am glad you do not need to sell your soul to the devil by selling houses.

by C'est la vie | 8th Feb 21, 8:44am 1612727045

If you rent in a flatting situation like my partner and I did while living in Auckland, your rent is likely closer to 17k. $280 a week for food seems very high too. It's do-able, we saved about 25k a year on below the average income level. Took 2 years to get into the market with KiwiSaver.

by Pusheen | 8th Feb 21, 2:35am 1612704928

NZ dirty little secret, that even IRD is chicken out to chase it - as govt & rbnz will put them in sitting position:
https://www.stuff.co.nz/business/opinion-analysis/300223000/property-in…